The shares of the Largest Automobile Manufacturer gained 1.2 percent to Rs 627.35 a share after Nomura Research and Morgan Stanley gave a ‘buy’ recommendation with an upside of 27 percent and 15 percent respectively based on Thursday’s closing price of Rs 619.60.
At 11:45 a.m., on the National Stock Exchange, Tata Motors Ltd shares were trading at Rs 623.10, up 0.56 percent from the previous close.
The company’s shares have delivered returns of 42 percent in six months and 50 percent in a year.
The company’s revenue climbed by 42 percent year on year, rising from Rs 71,934 crore in Q1FY23 to Rs 1,02,236 crore in Q1FY24. During the same time period, net profit increased from a loss of Rs 4,987 crore to a profit of Rs 3,089 crore.
Based on a positive outlook and based on Tata Motors Jaguar Land Rover segment sales. Nomura Research has assigned a ‘Buy’ rating with a target price of Rs 786 per share, implying an upside potential of up to 27%. Morgan Stanley has also assigned the stock a “Buy” rating with a target price of Rs 711 per share, implying a 15% upside potential.
The rationale behind providing such a recommendation is
● The Tata Motors Jaguar Land Rover business recorded higher-than-expected sales in the second quarter (Q2FY24). With stronger output in the second half of FY24, the brokerage believes JLR is on pace to exceed expectations. “The estimate for FY24 is 4.06 lakh units, excluding China JV.”
● Morgan Stanley has assigned the stock an ‘Overweight’ rating based on the strong mix support of Q2 margins and forms upside risk to the FY24 EBIT margin projection of 6.6%.
Recently, Tata Motors’ UK-based luxury subsidiary reported a rise in sales volumes for the current fiscal second quarter. Wholesale volumes were 96,817 automobiles (excluding the Chery Jaguar Land Rover China JV), increasing 29 percent from the previous quarter and 4 percent from the April-June period.
Wholesale volumes for the first half of the fiscal were 190,070, up 29% from the year-ago period. Retail sales in the reported quarter came in at 106,561 units (including the Chery Jaguar Land Rover-China Joint Venture).
JLR has maintained a strong order book of 1.68 lakh units at the end of the September quarter. Demand for the Range Rover, Range Rover Sport, and Defender models remained strong, accounting for 77% of the order book.
JLR business also expects a positive free cash flow of around £300 million in the second quarter of this fiscal.
Written by Omkar Chitnis
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