The stock of Tata Motors vroomed over 5 per cent on the BSE to close at ₹461.05 — best close since September 2, 2022 — driven by the growth in sales for the fourth quarter reported by Jaguar Land Rover (JLR). During the day, it hit a high of ₹473.10, just a shade away from its 52-week high figure of ₹494.50, hit on August 17, 2022.

Last week, JLR reported a 34 per cent growth in volumes in Q4FY23 compared with the sales recorded in the corresponding period last year.

After the sales figures, several brokerages reiterated their Buy on the stock with higher target price.

Goldman Sachs has turned Buy on the stock from its Neutral stance with a price target of ₹550. The global brokerage upgraded its rating “to factor in an improving volume outlook at JLR”, while raising FY24-25 EBITDA estimates by 15-16 per cent. “Market is underestimating JLR EBIT margin potential,” it added.

Also read: Tata Motors shares jump over 5% on strong sales performance

Ventura is most bullish

According to Ventura Securities, that recently initiated coverage on Tata Motors with a target price of ₹715 (in 30 months), “Since 2018, the Tata Motors management has undertaken several restructuring initiatives which are expected to improve operating efficiency, lower capex and hasten free cash flow generations for JLR. “JLR has taken a number of initiatives to realign its portfolio to an electric future, thus ensuring sustainability and visibility to its business model,” it added.

However, it was a mixed call from some of the other international brokerages. While Nomura, BofA and CLSA have retained their ‘Buy’ on the stock, JP Morgan gave a “neutral’ rating, as the brokerage remained cautious on demand and pricing for FY24 as inventory levels normalise.

BofA saw a case for accelerated de-leveraging ahead due to the “solid ramp-up at JLR; booking run rate better than expected”. It also reported the risk/reward for the stock as favourable at current levels.

Also read: Tata Motors’ global wholesales rise 8% Q4 FY23

A report from domestic brokerage Motilal Oswal said, “All three businesses of Tata Motors are in a recovery mode. While the India commercial vehicle business will see a cyclical recovery, the India passenger vehicle business is seeing a structural recovery. JLR is also witnessing a cyclical recovery, supported by a favourable 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 (about 50 per cent of SoTP) will continue, it said, recommending a Buy with a target of ₹525 (March 2025 SOTP).

ICICI Securities, in its preview of its quarterly performance, expected the auto major to report a healthy performance in Q4-FY23 primarily tracking a recovery in wholesale volumes at JLR. “At the PAT level, we expect the company to report profit of ₹2,269 crore in Q4-FY23,” it added.

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