Tata Motors hits 8-month high on strong Q4 hopes; stock up 20% in 3 weeks

Shares of Tata Motors gained 2.5 per cent to hit eight-month high of Rs 483.5 per share in Tuesday’s intra-day trade, on hopes of a healthy performance in the January-March quarter (Q4FY23), primarily tracking a recovery in wholesale volumes at Jaguar Land Rover (JLR). In comparison, the S&P BSE Sensex was up 0.16 per cent at 60,004, as of 09:29 am. The stock of Tata group passenger cars & utility vehicles maker quoted at its highest level since August 19, 2022. In the past three weeks, the stock rallied 20 per cent. The board of directors of Tata Motors is scheduled to meet on May 12, 2023 to consider and approve audited financial results of the company (Standalone and Consolidated), for the quarter and financial year ended March 31, 2023. Tata Motors is likely to register a 37 per cent consolidated revenue growth, driven by strong growth across JLR (+53 per cent), CVs (+18 per cent) and PVs (+7 per cent), said analysts at Emkay Global Financial Services. "The company is likey to see consolidated Earnings before interest, taxes, depreciation, and amortization (EBITDA) margin  expand by 140 bps, led by higher production in JLR, and supported by a strong margin performance in CVs," the brokerage firm added. Analysts at Prabhudas Liladher, on the other hand, expect Tata Motors to report a revenue growth of 23 per cent, helped by strong volumes and higher ASP across segments (JLR, CV and PV). "Volume ramp-up at JLR is expected to help revenues, profitability and drive FCF generation aided by strong order book. Overall volume has grown by 28 per cent quarter-on-quarter (QoQ) and EBITDA margin is at 11.6 per cent (+74bps QoQ)," the brokerage firm said. The total sales volume at Indian operations was at 2.52 lakh units, up 10.4 per cent QoQ with JLR sales volume (including China JV) anticipated at 1.08 lakh units, up 16.6 per cent QoQ. On consolidated basis for Q4FY23, analysts at ICICI Securities expect Tata Motors to report net sales of Rs 1.06 trillion, up 20 per cent QoQ. EBITDA in Q4FY23, meanwhile, is expected at Rs 13,664 crore, with corresponding EBITDA margins at 12.9 per cent. JLR’s EBITDA margins are expected at 13.5 per cent in Q4FY23. At the PAT level, the brokerage firm expects the company to report profit of Rs 2,269 crore in Q4FY23. "All three businesses of Tata Motors are in a recovery mode. While the India CV business will see a cyclical recovery, the India PV business is seeing a structural recovery. JLR is also witnessing a cyclical recovery, supported by a favorable product mix. However, supply-side issues will delay the recovery process. While there will be no near-term catalysts from the JLR business, the recovery in the India business (~50 per cent of SoTP) will continue," said analysts at Motilal Oswal Financial Services, with a ‘buy’ rating on Tata Motors, and target price of Rs 525 per share.