Tata Motors bets on strong H2, should you buy, sell, hold stock-

Tata Motors bets on strong H2, should you buy, sell, hold stock?

Tata Motors’ stock price soared 4.64% to Rs 666 a day after the Mumbai-headquartered automotive major announced the company aims to deliver a stronger performance in H2, due to a healthy order book at JLR, strong demand for heavy trucks in CV and exciting new generation products in PV. The financial performance is expected to further improve owing to a richer mix, continued low-break-even in JLR, execution of demand-pull strategy in CV and improving profitability in PV/EV.

Tata Motors on Thursday posted revenue of Rs 1.04 lakh crore in the second quarter of FY24 as against Rs 78,846 crore a year ago, the net profit came at Rs 3,764 crore as against a loss of Rs 944.61 crore for the same period last year. The company says all its auto verticals (PV, EV, CV and JLR) continued their profitable growth trajectory.

Should you buy, sell or hold Tata Motors shares?Jefferies: Buy – Target Price: Rs 800

“We fine-tune estimates factoring lower India volumes but higher margins. However, cutting our FY24-26 FCF estimates by 6-11% on higher R&D capitalization at JLR. By FY25E, we expect EBITDA to be 2.1x of FY23, EPS to rise to a new high, & auto balance sheet to turn net cash. Consensus has upgraded FY24E-25E EPS by 30-45% in the last six months; our FY24E-25e EPS still 22-27% above Street. Despite 60% CYTD stock outperformance vs Nifty-50, we retain Buy with PT of Rs 800.”

Motilal Oswal Financial Services: Buy – Target Price: 750

“Tata Motors should witness a healthy recovery as supply-side issues ease (for JLR) and commodity headwinds stabilize (for the India business). It will benefit from: a) the CV uptrend and stable growth in PVs, b) company-specific volume/margin drivers, and c) a sharp improvement in FCF as well as a reduction in net debt in both JLR and India businesses. The stock trades at 14.3x each on FY24E/FY25E consolidated P/E and 4.7x/3.9x EV/EBITDA. Reiterate ‘Buy’ with a Dec’25E SOTP-based Target Price of Rs 750.”

Prabhudas Lilladher: Accumulate – Target Price: 3,575

“We expect margins to improve in the near term from operating leverage, premiumisation, cost controls and stable commodity costs (we build in ~210bps increase over FY23-26E). Key monitorables will be 1) performance of new launches, 2) uptick in EV volumes, 3) competition in core segments and 4) recovery in rural markets. Maintain ‘Accumulate’ at Target Price of Rs 3,575 (at 16x on Sep-25E standalone EPS, Rs 83 for Fincorp and Rs 78 for Ather).”