Tata Motors: What CLSA says on Tata Technologies share sale, Safari launch & JLR

Foreign brokerage CLSA has upped its target price on Tata Motors Ltd to Rs 803 from Rs 777, as it added Rs 26 to its target price following the Tata group firm's stake sales in the IPO-bound Tata Technologies, based on the recent valuation round. Tata Motors entered an agreement to sell 9.9 per cent stake in Tata Technologies for Rs 1,610 crore, which ascribes Rs 16,100 crore value to the arm. Tata Motors held a 74.69 per cent stake in Tata Technologies before the stake sale.

CLSA said British and Jaguar Land Rover is likely to report higher margins for H1FY24 while suggesting Tata Motors to have a strong SUV pipeline next year. CLSA expects share gains for Tata Motors in the SUV segment to continue over the next two years and estimate SUVs to form 49 per cent of the industry in FY25. It sees Tata Motors' SUV share to be 65.4 per cent for FY25 and FY26. On the other hand, the brokerage sees market share for Tata Motors in the passenger vehicle segment to increase to 16.1 per cent by FY26.

On the recently launched facelifts of Tata Safari and Harrier, the brokerage said the total volume for the Safari and Harrier combined was 12,594 in the June quarter, which was 8.8 per cent of Tata Motors’ total passenger vehicle volume. It said the EV variants of the Safari and Harrier are expected to launch next year.

On JLR, the brokerage said wholesale volume grew 29 per cent YoY for the British arm (excluding the China JV) in the September quarter. Retail volume was up 21 per cent YoY.

For H1FY24, JLR is likely to report an EBIT margin of 8.3 per cent and absolute EBIT of £1,161 million. It said H2FY24 is seasonally stronger than H1FY24 for JLR. JLR is set to achieve £2 billion free cash flow in FY24, it said.

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