Shares of Tata Motors surged 8% in opening deals at ₹401 on the BSE after the homegrown automaker’s net loss narrowed to ₹1,033 crore in the quarter ended March, compared to loss of ₹7,605 crore in the year-ago period. It witnessed over 11% year-on-year (YoY) drop in revenue to ₹78,439 crore.
“We maintain our positive stance on Tata Motors as the PV segment will likely gain further market share led by revamped portfolio, customer preference for SUVs and rising EV penetration, CV volumes will continue to benefit from cyclical upturn, improving fleet utilization and freight rates, revival in JLR and strong order book to benefit and drive FCF generation,” said brokerage Prabhudas Lilladher.
It has maintained its ‘Buy’ rating on Tata Motors shares with revised SOTP based FY24 target price of ₹600. The brokerage expects 1QFY23 to witness pressure, however, over FY23 new products, demand momentum and price pass-ons will improve profitability, in its view.
For the Jaguar Land Rover (JLR) business, revenue was £4.8 billion in the fourth quarter, down 27% over last year, hit by of the runout of the previous generation Range Rover.
With pick-up in FCF generation momentum in domestic business led by CV upcycle; strong turnaround in domestic PV business; and JLR confident of generating GBP1bn of FCF in FY23 despite lockdown challenges in 1Q, analysts at Ambit remain confident of Tata Motors turning near net debt free by FY24E. The brokerage has reiterated its Buy rating on the auto stock with SOTP-based target price of ₹551 ( ₹574 earlier).
“JLR’s order book is strong at 168,000 units, while dealer inventories are low. New generation products like RR/RR Sport are expected to support order-bookings ahead. Chip supplies should improve going forward, but in a staggered manner. We expect a strong 20% CAGR over FY22-24E. Reaffirm Buy with a revised SOTP-based target price of ₹535 ( ₹530 earlier), based on June 2024E (March 2024E earlier) estimates,” said Emkay.
The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.