Tata Motors shares jump 4% on Q1 results beat. Here are revised stock price targets

Tata Motors June quarter results impressed analysts who said the JLR-owner's operating performance was strong and the Tata group firm's deleveraging plan is on track. A strong beat was led by JLR and commercial vehicle business, even as the passenger vehicle segment disappointed. Post Tata Motors' quarterly results, a few analysts even believe JLR’s volume improvement along with better mix will likely continue and may result in guidance upgrade in coming quarters. Analysts are keeping a 'Buy' rating on the stock, with their target prices of Rs 700-800 per share suggests up to 20 per cent potential upside ahead.

On Tuesday, the stock rose 4.04 per cent to hit a high of Rs 665.30 on BSE.

Tata Motors should witness a healthy recovery as supply-side issues ease for JLR, along with a better mix, lower discounts and operating leverage, said Motilal Securities. It has suggested a target of Rs 750 on the counter.

Nuvama Institutional Equities has upped its target on the stock to Rs Rs 785 from Rs 720, factoring in increase in estimates and reduction in share capital by 4 per cent owing to conversion of DVR shares into ordinary shares.

Jefferies has maintained a 'Buy' on the stock with a target price of Rs 800 per share. CLSA sees the stock at Rs 780 while Morgan Stanley pegs it at Rs 711 per share.

The Tata group firm on Tuesday reported a consolidated profit of Rs 3,202.80 crore for the June quarter compared with a loss of Rs 5,006.60 crore in the same quarte last year. Consolidated revenue for the quarter came in at Rs 1,02,236 crore, up 42.1 per cent, the Tata group firm said in a BSE filing.

Ebitda for the quarter stood at Rs 14,700 crore, up 177 per cent. EBIT came in at about Rs 8,300 crore, driven by JLR and CV businesses whilst the PV business was steady.

"Overall, we maintain our positive stance on Tata Motors given (1) JLR’s volume ramp-up resulting in strong revenue, profitability and FCF, 2) CV segment (on domestic side) benefitting from ongoing upcycle, operating leverage and tailwinds from low commodity costs & low discounting and (3) sustained market share in PV segment led by revamped portfolio, rising SUV share and rising EV penetration. We expect Revenue/Ebitda CAGR of 17 per cent/44 per cent over FY24/25E," said Prabhudas Lilladher. This brokerage has upped its target price on the stock to Rs 760 from Rs 675

JM Financial, which has a target of Rs 730 on the stock, noted that the Tata Motors management has maintained FY24 production guidance of 4,00,000-plus units at JLR and indicated of upside risk to 6 per cent EBIT margin guidance led by favourable mix, softening RM cost (during 2H) and higher operating leverage.

Global retail demand remains healthy with strong order backlog, it said.

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"A strong FCF generation is expected to support higher investments towards electrification at JLR. Tata Motors’ EV portfolio is leading the domestic EV space. Improving margins for both domestic CV and PV segments augurs well for the overall profitability of the company. The company targets to turn net debt free by FY25," it said.

 

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