BackTata Motors shares: Why brokerages are bullish post Q1 results despite widening loss
Tata Motors expects JLR performance to improve significantly starting Q2 FY23
PremiumShares of Tata Motors plunged 2% to ₹434 apiece on the BSE in Thursday's opening deals after consolidated net loss widened to ₹4,951 crore for the June quarter, from ₹4,451 crore loss a year earlier, primarily on account of pressures faced by JLR. Consolidated revenue from operations during the period under review stood at ₹71,935 crore as against ₹66,406 crore in the year-ago period.
Tata Motors' Q1 EBITDA fell 40% YoY and was 51% below Jefferies estimates mainly led by weak JLR results. JLR's EBITDA margin fell a sharp 620 bps QoQ on lower volumes and weaker mix due to slower ramp-up of new RR/RR-Sport models.
“India business performed well with CV Ebitda ahead of JEFe and PV EBITDA broadly inline. Tata Motors expects JLR performance to improve significantly starting 2Q as RR/RR-Sport production ramps up amid strong order book. We cut FY23 EPS by 24% but retain Buy on Tata Motors shares," said Jefferies with target price of ₹540 on the auto stock.
The company's British arm Jaguar Land Rover (JLR) posted revenue of 4.4 billion pound in the first quarter, down 7.6 per cent from the fourth quarter of FY22, impacted by supply challenges including semiconductor shortages.
JLR's CEO Thierry Bollore said headwinds from the global semiconductor supply and COVID lockdowns in China impacted its business performance in the period under review.
Tata Motors expects its British luxury brands Jaguar Land Rover to post a five-quarter-high production in the September quarter (Q2FY23), outweighing a disappointing performance in the first quarter of the financial year. Demand for JLR’s premium and luxury brand of cars are expected to remain strong in the UK, Europe and even China, despite concerns of high inflation and geopolitical uncertainties.
“We estimate FY22-24E India CV/PV volume CAGRs of 16%/28%, driven by continued upcycle in industry sales and better chip supplies. The focus remains on E-PVs, with medium-term investments of US$2bn toward new products, capacity expansion, localization, and charging infrastructure," said brokerage Emkay. The brokerage has reaffirmed Buy with an SOTP-based target price of ₹530.
The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.
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