Tata Motors hits 52-week high on Q1 cheer, ‘A’ shares on fire

Shares of Tata Motors Limited rose more than 3% to hit a new 52-week high at Rs 665 around 9:15 a.m. on July 26, with 22,000 shares traded on the NSE.
The company’s board of directors approved the delisting of the DVRs and their replacement with common stock. Under the proposed plan, Tata Motors will issue 7 fully paid ordinary shares with a nominal value of Rs 2 per share, for 10 DVRs.

Additionally, the carmaker reported a consolidated net profit of Rs 3,203 crore in the first quarter, boosted by improved margins in its passenger vehicle (PV) business and sales. Strong sales at the luxury passenger car unit, Jaguar Land Rover (JLR). The company’s cost of capital nearly doubled to Rs 1,964 crore in the first quarter. Some brokerages are also upbeat about Tata Motor’s first-quarter earnings after the major auto company beat analyst estimates by a reasonable margin. Motilal Oswal Financial Services (MOFSL) says the company will have a healthy recovery as supply issues ease (for JLR), along with better mix, lower discounts and operating leverage. It expects output and cash flow in the second quarter to be lower than in the first quarter due to annual summer plant closures. However, wholesale sales and profits will be more in line with recent quarters. MOFSL retains a buy rating with a target price of Rs 750.
Nuvama Institutional Equities says revenue growth will be driven by increased production and a huge backlog (185,000 units) of Defender, Range Rover and Range Rover Sport. “We expect compound annual revenue growth of 16% for the period 2023-25E. Jefferies, which is also maintaining purchasing activity, has set a target price of Rs 800. Lenders CLSA said. Profit margins will improve further as output and volume increase as well as commodity costs decline.
Analysts at ICICI Securities are cautiously positive on the stock and have maintained a positive rating. They think JLR’s margins could decline as the company aims to add more categories to its portfolio. Operating revenue increased 42% to Rs 1.02 lakh in the quarter under review. Earnings before interest, tax, depreciation and amortization (EBITDA) for the quarter came in at Rs 14,700 crore, up 177%, the company said in an exchange filing on July 25.
JLR, the UK arm of Tata Motors, recorded a 57% increase in revenue to £6.9 billion. This improvement was driven by strong wholesale sales and better product mix. However, commercial vehicle (CV) volumes were down 15% year-over-year, mainly due to the transition to BS6 Phase 2.