The shares of the Largest Automobile Manufacturer gained 2.3% to an intraday high of ₹1,010 per share on Wednesday trade after the foreign broker gave an upside of 26% on the stock, citing management’s strong growth guidance.
On Wednesday, Tata Motors Ltd. shares closed at ₹988.60, up 0.15 percent from the previous close on the National Stock Exchange. The company has a market value of ₹3,29,406 crore.
Tata Motor Ltd is a leading global automobile manufacturer that provides the global market with an extensive and varied range of automobiles, trucks, buses, sport utility vehicles, and defence vehicles.
Tata Motors has a strong global network with operations in India, the UK, South Korea, South Africa, China, Brazil, Austria, and Slovakia.
The company’s shares have delivered a return of 38% in six months and 75% in a year.
The company’s revenue climbed by 13% year on year, rising from ₹1,05,932 crores in Q4FY23 to Rs 1,19,986 crores in Q4FY24. During the same period, net profit increased by 218% from ₹5,496 crores to a profit of ₹17,529 crores.
In FY24, the company saw a positive shift in its Small Commercial Vehicle market share, reaching 39.1%. Concurrently, Tata Motors Passenger Electric Vehicles (EV) witnessed a notable surge, with volumes rising from 50,000 units in FY23 to 73,800 units in FY24, representing a 47.8% increase.
Moreover, the company’s market dominance in the passenger EV segment reached 73.1% in FY24.During Q4FY24, the company showcased robust financial performance, generating a strong Free Cash Flow of ₹14,100 crores, contributing to a full-year auto Free Cash Flow of ₹26,900 crores.
Despite escalating investments, the company maintained positive cash flows, underpinned by its solid cash profits.
In the previous fiscal year, Tata Motors Ltd.’s India operations achieved a net-debt-free status, as reported in an investor presentation on Tuesday.
Additionally, the company announced its projection that Jaguar Land Rover, its subsidiary, will also achieve net-debt-free status by the end of the current fiscal year.
The company’s investment expenditures have surged to ₹42,000 crore, driven by robust free cash flow, which has increased fivefold from its pandemic lows. Furthermore, the Return on Capital Employed (ROCE) has remained robust at 18%, a level not observed since the fiscal year 2015.
Jefferies has given a ‘buy’ rating on Tata Motors with a target price of ₹ 1,250 per share and an upside of 26 percent based on Wednesday’s trading price of ₹988.60.
Jefferies highlighted the brokerage’s focus on Tata Motors’ dedication to strengthening its brand visibility and improving profitability across both passenger vehicles (PVs) and commercial vehicles (CVs) sectors.
Tata Motors aims to increase its PV market share to 16 percent by FY27 and further to 18-20 percent by FY30. Additionally, Tata Motors is aiming for a double-digit EBITDA margin in both its CV and PV (Internal Combustion Engine) divisions, while also working towards profitability in its electric vehicle (EV) segment by FY26.
Jefferies mentioned that the company management is confident about achieving financial stability and aims to become debt-free by fiscal year 2025. Additionally, Tata Motors has set an ambitious target to capture a market share of over 25 percent across different segments.
In March 2024, the Board of Directors of Tata Motors Limited (TML) approved the demerger of Tata Motors Ltd into two separate listed entities. One entity will house the Commercial Vehicles (CV) business and its related investments,
While the other entity will incorporate the Passenger Vehicles (PV) businesses, including conventional internal combustion engine vehicles, Electric Vehicles (EV), Jaguar Land Rover (JLR) division, and their related investments.
Written by Omkar Chitnis
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