Tata Motors shares hit record high: What's fueling rally
What's the story
Tata Motors's stock soared over 7% today, reaching an all-time high after announcing impressive earnings for the October-December 2023 quarter. This surge made the automaker the top Nifty 50 gainer, with several analysts raising their target prices due to a strong third quarter and better growth prospects in the future. For the first time, Tata Motors's 12-month revenue through December 2023 hit the $50 billion mark. At 12:30pm, the stock was trading at Rs. 935.10, up 6.4% since Friday's closing.
New target
Jefferies raises its target price to Rs. 1,100
Multiple brokerages, including Jefferies, HSBC, Morgan Stanley, Nomura, Goldman Sachs, Macquarie, and CLSA, have increased their target prices for Tata Motors. They anticipate an even better January-March 2024 quarter due to seasonal factors and improved supplies at Jaguar Land Rover (JLR), the British luxury car unit responsible for driving strong sales. Jefferies has a buy call on the company and raised its target price to Rs. 1,100, suggesting a 25% upside from the closing price on February 2.
Better growth ahead
Jefferies highlighted strong pipeline for Tata's passenger vehicle launches
Jefferies highlighted that Tata Motors's Q3 EBITDA rose 59% YoY and 12% sequentially to a new high. While the brokerage sees some industry demand concerns in India for calendar year 2024, it appreciates the company's robust passenger vehicles (PV) launch pipeline. As a result, Jefferies increased its FY24-26 earnings per share (EPS) estimates by 7-11%. Morgan Stanley maintained an overweight rating, driven by JLR's de-leveraging and Tata Motors's electric vehicles (EVs) fueled by the PV turnaround.