The CV segment and Jaguar Land Rover (JLR) exceeded market expectations, so brokers were generally optimistic about the automaker.
On August 2, Tata Motors reported better-than-expected results for the June quarter, but the company’s shares fell more than 4% to Rs 1,095 per share. The commentary from management that indicated sluggish global demand for the remainder of the fiscal year prompted the decline. However, the company’s CV segment and Jaguar Land Rover (JLR) exceeding market expectations were the main reasons brokerages were optimistic about the company.
Jefferies gave Tata Motors a “buy” recommendation and raised the target price to Rs 1,330 per share due to the company’s stronger-than-expected EBITDA in the India CV sector. Due to JLR’s impressive performance in difficult market conditions, Nomura also maintained a bullish outlook and set a target price of Rs 1,303 per share.
Tata Motors’ domestic CV revenues increased by 5.1% year-over-year to Rs 17,800 crore, and the company’s EBIT margins increased by 240 basis points to 8.9% as a result of improved realizations and material cost savings.
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Between April and June, JLR’s revenue increased to GBP 7.3 billion, with EBIT margins of 8.9 percent, up 30 basis points due to improvements in volume, mix, and material costs.
However, due to competition in the passenger vehicle (PV) market, UBS analysts maintained a “sell” rating for Tata Motors and raised the target price from Rs 800 to Rs 825. PV revenues decreased by 7.7% as a result of difficult market conditions, but EBITDA increased by 50 basis points, or 5.8%, as a result of lower material costs.
JPMorgan analysts maintained an “overweight” rating and raised the target price from Rs 1,115 to Rs 1,250 per share, stating that the India PV segment needs to perform better in the second half of the fiscal year.
Overall, Tata Motors’ Q1FY25 consolidated net profit increased by 74% YoY to Rs 5,566 crore from Rs 3,203 crore, while operating revenue increased by 5.7% YoY to Rs 1,07,316 crore.
The Indian automaker’s consolidated EBITDA increased by 19% year-over-year to Rs 15,785 crore, and the operating margin increased from 12.9 percent during the same time last year to 14.6 percent now.
