Tata Motors shares rally 4.6% after strong Q2 profit
What's the story
Tata Motors witnessed over 4.6% increase in its share price during early trading on Friday, following the release of its Q2 results that met market expectations. Tata Motors shares jumped as much as 4.64% to Rs. 666 apiece on the NSE. The automotive giant posted a consolidated net profit of Rs. 3,783 crore for Q2 FY24, largely due to the strong performance of Jaguar Land Rover (JLR). This marks the fourth consecutive quarter of positive results for the company.
Details
Strong growth in revenue and JLR sales
The total consolidated revenue from operations for Tata Motors in Q2FY24 rose by 32% to Rs. 1,05,128 crore, up from Rs. 79,611 crore during the same period last year. This surge can be attributed to a 21% increase in retail sales of JLR models, including those from its China joint venture.
What Next?
The company upgraded its EBIT margin guidance
JLR's revenue experienced a 30.4% YoY growth, driven by strong wholesales and an improved product mix. JLR has revised its FY24 EBIT (Earnings Before Interest and Taxes) margin guidance from 6% to 8%, anticipating higher production and wholesale volumes in H2FY24. The automaker also expects a free cash flow of over £2 billion (Rs. 20,327.8 crore) in FY24.
Insights
Brokerages upgrade ratings and target prices
Analysts remain optimistic about Tata Motors's stock following the Q2 results. Nuvama Institutional Equities has maintained a 'Buy' rating on Tata Motors with a target price of Rs. 840 per share. Meanwhile, Kotak Institutional Equities has upgraded the stock to 'Reduce' from 'Sell' and increased the target price to Rs. 630 per share from Rs. 600 previously. Prabhudas Lilladher has also retained a 'Buy' call and raised the target price to Rs. 785 per share from Rs. 760 earlier.
Facts
Ratings and targets by International brokerage
International brokerages such as CLSA and Jefferies have both issued a 'Buy' rating on Tata Motors, with target prices of Rs. 803 and Rs. 800 per share, respectively. Over the past year, Tata Motors shares have risen by 56.95% and surged by 65.48% in the year-to-date period. At the time of writing, Tata Motors shares traded at Rs. 653.20, up 2.63% on NSE.