JLR wholesale numbers for Jan-Mar drive Tata Motors shares to 7-month high

Shares of Tata Motors zoomed 8 percent in early trade on April 10 after the company recorded robust group global wholesales, including those of its luxury arm, Jaguar Land Rover (JLR), during the January-March period.

The company’s global wholesale volume, including that of JLR spiked 8 percent on-year to 3,61,361 units in the fourth quarter of FY23.

The combined worldwide sales of all Tata Motors’ commercial vehicles and Tata Daewoo range in the January-March period totalled 118,321 units, reflecting a 3 percent increase over the same period last year.

The global sales of JLR in January-March period reached 107,386 vehicles, comprising 15,499 units of Jaguar and 91,887 units of Land Rover, the company said in an exchange filing.

Shares of the carmaker also reacted positively to the news as the stock edged up to a seven-month intraday high of Rs 473.30. At 9.59am, the shares of Tata Motors were trading with gains of 7.62 percent at Rs 471 on the National Stock Exchange.

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Here’s what brokerages say

Nomura attributed the rise in JLR volumes to improved supply of semiconductors and estimates the arm’s EBIDTA (earnings before interest, taxes, depreciation, and amortisation) margin for the fourth quarter at 13.8 percent. The broking firm has a ‘buy’ call for Tata Motors, with a  target price of Rs 508.

Another foreign brokerage, Goldman Sachs upgraded the stock to ‘buy’, with a target price of Rs 544, which reflects an upside potential of over 24 percent from Thursday’s closing price. The firm cited improving volume outlook for the company’s luxury arm JLR as the reason behind the upgrade.

Goldman Sachs also raised its FY24-25 EBITDA estimates for Tata Motors by 15 percent/16 percent. The broking firm also feels the market is underestimating the EBIT (earnings before interest and taxes) margin potential of Jaguar Land Rover.

Along similar lines, BoFA Securities also maintains a positive outlook on Tata Motors and sees a case for accelerated de-leveraging for the carmaker going ahead. The firm also feels that the ramp-up at JLR and its booking run-rate was better than expectations. On that account, the global broking firm sees risk reward for Tata Motors turning favourable at current levels. The brokerage has a ‘buy’ call for the stock, with a price target of Rs 475.

However, contrasting with other brokerages, JP Morgan has a ‘neutral’ stance on Tata Motors, with a target price of Rs 438. The broking firm remains caution on demand and pricing trends for FY24 as inventory levels begin to normalise.

Another factor prompting caution for the brokerage is a growth moderation in the commercial and passenger vehicle segment in the company’s India business. Nonetheless, JP Morgan still expects JLR to witness another quarter of strong wholesales.

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