Tata Motors shares climb 7% on JLR sales data; Motilal sees 25% further upside on Tata group stock

Shares of Tata Motors climbed 7 per cent in Tuesday's trade after the automaker said its global wholesales in December quarter, including that of Jaguar Land Rover, stood at 3,22,556 units, up 13 per cent on a year-on-year basis. Free cash flow is expected to be positive at 400 million British pound for December quarter, Tata Motors said in a BSE filing.

Following the development, the scrip rose 6.77 per cent to hit a high of Rs 415.80 on BSE. Motilal Oswal has a target of Rs 520 on the stock. At the prevailing price, the target suggests a 25 per cent potential upside for the stock.

In a filing to BSE, the Tata group firm said global wholesales of Tata Motors’ commercial vehicles and Tata Daewoo range in December quarter stood at  97,956 units, down 5 per cent on YoY basis.

It said global wholesales of passenger vehicles came in at 2,24,600 units, up 23 per cent YoY.

Global wholesales for Jaguar Land Rover were at 92,345 vehicles. This included JLR numbers for Cherry JLR volumes of 12,754 units. Jaguar wholesales for the quarter came in at 16,275 vehicles, while Land  Rover wholesales for the quarter stood at 76,070 vehicles, Tata Motors said.

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Motilal Oswal Securities said all three businesses of Tata Motors are in the recovery mode. While the India commercial vehicle (CV) business will see a cyclical recovery, the India passenger vehicle (PV) business is in a structural recovery mode, it said.

"JLR is also witnessing a cyclical recovery, supported by a favorable product mix. However, supply-side issues will defer the recovery process. While there will be no near-term catalysts from the JLR business, the India business (50 per cent of SoTP) will see a continued recovery. The stock trades at 17.1 times FY24E consolidated EPS and 3 times P/BV. We maintain our ‘Buy’ rating with a target of Rs 520," Motilal Oswal said in a BSE filing.

The brokerage said production of the new Range Rover and new Range Rover Sport has doubled on a sequentially basis to 27,5000 units in December quarter and that the mix was better than expected and would materially influence operating performance in the December quarter.

Order book has grown to almost 2,15,000 units, up around 10,000 orders September 30, reflecting strong demand, Motilal Oswal said.

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