Tata Motors zooms to 52-week high on JLR outlook, IPO nod to Tata Tech

Shares of Tata Motors jumped nearly 3 percent in afternoon trade on June 28 to hit a 52-week high of Rs 589.30. Sentiment for the stock has remained upbeat on the back of a strong growth outlook for its luxury arm Jaguar and Land Rover (JLR) and the approval of the public offer for its subsidiary Tata Technologies.

Adding to the positive sentiment for the carmaker, global research and broking firm CLSA also raised the price target for Tata Motors by nearly 8 percent to Rs 690, which reflects an over-20 percent upside potential from Tuesday’s closing price.

CLSA believes strong execution, along with prudent cash management across businesses and a stable domestic demand for commercial vehicles (CV), is likely to aid growth for the company. “JLR’s retail volumes continued to grow at a strong pace in May and EBIT (earnings before interest and taxes) margin for the vertical is likely to hit 6 percent in the current fiscal,” the brokerage stated in its report.

Baking that in, the firm has also raised its earnings estimates for Tata Motors by 11-18 percent for FY24-25 led by higher margin for JLR and its CV business.

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Brokerage firm Motilal Oswal Financial Services also chose Tata Motors as its top pick within the sector, thanks to its strong positioning which makes it a key beneficiary of the rising CV demand.

At 1.25pm, shares of Tata Motors were trading at Rs 585.95 on the NSE, up 2.24 percent from the previous close. Volumes were also strong as one crore shares of the carmaker changed hands on the exchanges, higher than the one-week daily traded average of 97 lakh shares.

The Securities and Exchange Board of India approved the public offer of Tata Tech on June 27, making it the first IPO of a Tata Group company within the last 20 years. Tata Motors holds a 74.69 percent stake in Tata Tech.

The automobile major plans to sell 26.77 percent of its stake in Tata Tech and use the proceeds to reduce its debt which is seen as a positive among investors. Likewise, the stock has also skyrocketed around 51 percent in the year so far.

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