Tata Motors share price hits all-time high on robust Q1 results; should you buy, sell or hold?

Tata Motors' share price rose by over 3% after reporting a Q1FY24 net profit of 3,300.65 crore, driven by improvements in Jaguar Land Rover and commercial vehicles division.

Dhanya Nagasundaram
Published26 Jul 2023, 09:31 AM IST
Tata Motors share price opened at  <span class='webrupee'>₹</span>642 apiece on BSE.
Tata Motors share price opened at ₹642 apiece on BSE.

Tata Motors share price rose over 4% and hit an all-time high on Wednesday's trading session following company's Q1FY24 earnings. Tata Motors reported a consolidated net profit of 3,203 crore for the first quarter that ended on June 30, as a result of significant improvements in the performance of its British affiliate Jaguar Land Rover and the commercial vehicles division on Tuesday. Tata Motors share price opened at 642 apiece on BSE. Tata Motors shares touched an all-time high of 665.30.

Tata Motors Q1 Results: Net profit at 3,202 crore, revenue up 42% YoY crossing 1 lakh crore-mark

According to street estimates, Tata Motors operating revenue increased 42% to 102,236.08 crore in the June quarter, exceeding the 1 lakh crore milestone. 

Tata Motors' consolidated operational profit, grew 177% to 14,700 crore over the prior year. Operating margin climbed to 14.4% in the June quarter, up 700 basis points (bps) year over year. The JLR and commercial vehicles (CV) segments drove a profit improvement, which resulted in a Rs. 417,000 crore decrease in net auto debt.

Tata Motors DVR share price surges 18%: What are DVR shares, what conversion to Tata Motors shares mean, and more

“FY24 has begun on the right note with all automotive verticals delivering strong performances. The distinct strategy employed by each business is now delivering consistent results and making them structurally stronger. We remain confident of sustaining this momentum in the rest of the year and achieve our stated goals,'' said PB Balaji, Group Chief Financial Officer, Tata Motors.

Tata Motors' JLR revenue jumps 57% on year to £6.9 billion in Q1FY24

On the technical front, as per trendlyne data, the stock price rose 44.9% and outperformed its sector by 10% in the past year.

“Following the news the stock prices have seen strong traction and overall this counter has been an outperforen in the recent Run. Prices have now sustained above its year 2015 high of around 600 and is trading with multi - year breakout , we continue to have a positive bias where dips should be considered as a buying opportunity. On the higher side, 700 seems immediate extended targets,” said Rajesh Bhosale - Equity Technical and Derivative Analyst, Angel One.

What does brokerages say? 

Nuvama Institutional Equities 

The brokerage claims that Tata Motors recorded Q1FY24 EBITDA of 136 billion, beating expectations by 14%, and that JLR's margin surprised analysts favourably due to improved mix, pricing, and currency. The brokerage has increased its EBITDA estimates for FY24 and FY25 by 10% and 8%, respectively.

The growth in the JLR and India CV/PV businesses will drive a CAGR of 17% in Tata Motors' consolidated revenue over the years FY23 to FY25. In addition, strict cost management should increase profitability, boosting the EBITDA CAGR to 42%. There will also be considerably less "friction" as net debt-to-equity ratios decline to 0.6x in FY25E (from 1.7x in FY23) as a result of significant Free cash flow (FCF) generation.

" Maintain ‘buy’ with a revised SoTP-based target price of 785 (earlier 720), factoring in increase in estimates and reduction in share capital by 4% owing to conversion of DVR shares," said the brokerage in its report.

JM Financial Institutional Securities

JLR reported EBITDAM of 16.3% in 1QFY24, +130bps higher than the brokerages' predictions. EBITDAM adjusted was at 15.3%. A better mix played a big role in the sequential improvement. EBITDAM for the India business was 7.9%, roughly in line with brokerages' projection. According to the brokerage, Tata Motors expects a gradual improvement in chip supplies until FY24.

"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. Maintain 'buy' with Jun’24 SOTP of 730. Slowdown in key global markets remains a risk to our estimates," said the brokerage in its report.

Kotak Institutional Equities 

According to the brokerage's analysis, Tata Motors' 1QFY24 consolidated EBITDA surpassed estimates by 9% as a result of better-than-anticipated profitability in the JLR and CV businesses, which were partially offset by commodity headwinds (with a lag effect) in the domestic PV sector.

Given consistent demand patterns in the domestic market and JLR, as well as favourable commodity market conditions, FY2024E performance will remain robust and balance sheet deleveraging will proceed. However, the medium-term growth prospects of the JLR business remain sensitive to the heightened competitive intensity in the Chinese BEV market, said the brokerage in its report.

"We have increased our FY2024E consolidated EBITDA estimates by 12% baking in strong 1QFY24 performance of JLR as well as domestic CV business. We have increased our FY2025-26E consolidated EPS estimates by 8% driven by 1-2% increase in EBITDA assumptions and 4% positive impact due to reduction in share capital on account of cancellation of DVR shares.

We expect FY2024E performance to remain healthy led by improvement in JLR business performance and steady demand conditions in the domestic markets, which will drive deleveraging. However, increased competitive intensity in the Chinese BEV market as well as market share loss in CV segment remain an area of concern. SELL stays with a revised FV of Rs600 (from Rs550) based on SoTP methodology," added the brokerage.

 

Catch all the Business News, Market News, Breaking News Events and Latest News Updates on Live Mint. Download The Mint News App to get Daily Market Updates.MoreLess

News in Numbers

Numbers that help you understand news better
₹68,885 Cr

3.15L

48%

₹6.7 T

$240.5 M

$459 M

$3 B

₹588.25 Cr

₹20,000 Cr

7.93 Cr

₹8,943 Cr

10%

20 Yrs

First Published:26 Jul 2023, 09:31 AM IST
HomeMarketsStock MarketsTata Motors share price hits all-time high on robust Q1 results; should you buy, sell or hold?

Most Active Stocks

Tata Steel

157.75
03:43 PM | 19 JUL 2024
-8.6 (-5.17%)

Tata Power

414.15
03:59 PM | 19 JUL 2024
-15.85 (-3.69%)

Bharat Electronics

306.30
03:45 PM | 19 JUL 2024
-7.2 (-2.3%)

Zee Entertainment Enterprises

137.55
03:57 PM | 19 JUL 2024
-4.9 (-3.44%)
More Active Stocks

Market Snapshot

  • Top Gainers
  • Top Losers
  • 52 Week High

Tata Teleservices Maharashtra

102.11
03:59 PM | 19 JUL 2024
4.68 (4.8%)

Rail Vikas Nigam

614.00
03:59 PM | 19 JUL 2024
27.65 (4.72%)

Jubilant Pharmova

752.25
03:43 PM | 19 JUL 2024
25.3 (3.48%)

One 97 Communications

458.70
03:55 PM | 19 JUL 2024
13.65 (3.07%)
More from Top Gainers

Recommended For You

    More Recommendations

    Gold Prices

    • 24K
    • 22K
    Bangalore
    74,925.00-1,347.00
    Chennai
    74,558.00-1,566.00
    Delhi
    75,144.00-389.00
    Kolkata
    74,558.00-531.00

    Fuel Price

    • Petrol
    • Diesel
    Bangalore
    102.86/L0.00
    Chennai
    100.75/L-0.01
    Kolkata
    104.95/L0.00
    New Delhi
    94.72/L0.00
    OPEN IN APP
    HomeMarketsPremiumInstant LoanBudget