Tata Motors hits 52-week high on Q1 cheer, 'A' shares on fire

Tata Motors' capex spending nearly doubled to Rs 1,964 crore in the first quarter.

Tata Motors Limited shares gained more than 3 percent to hit a new 52-week high at Rs 665 around 9:15 am on July 26, with 22 lakh shares changing hands on the NSE.

The company's board of directors approved the cancellation of DVRs and replace them with ordinary shares. Under the proposed scheme, Tata Motors will issue 7 fully paid-up ordinary shares of face value Rs 2 each, for every 10 DVRs.

Moreover, the automobile manufacturer reported a consolidated net profit of Rs 3,203 crore for the first quarter boosted by the improved margin of its passenger vehicle (PV) business and robust sales at its luxury car unit, Jaguar Land Rover (JLR). The company's capex spending nearly doubled to Rs 1,964 crore in the first quarter.

Also read: Tata Motors DVR spikes on conversion to ordinary shares but premium shrinks

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Several brokerages are also upbeat on Tata Motor's first quarter earnings after the automobile major topped analyst estimates by a healthy margin.

Motilal Oswal Financial Services (MOFSL) has said that the company should witness a healthy recovery as supply-side issues ease (for JLR), along with a better mix, lower discounts and operating leverage. It expects second-quarter production and cash flow to be lower than Q1 due to the annual summer plant shutdown. However, wholesales and profitability are expected to be more in line with recent quarters. MOFSL has retained a buy rating with a target price of Rs 750.

Nuvama Institutional Equities said that revenue growth is likely to be driven by production ramp-up and the huge pending order book (185,000 units) from Defender, Range Rover and Range Rover Sport. "We expect 16 percent revenue CAGR over FY23–25E."

Jefferies, who also maintains a buy, has assigned a target price of Rs 800. Borking firm CLSA has said that margins will improve further as production and volumes rise and commodity costs fall.

Analysts at ICICI Securities are cautiously positive on the stock and have maintained an add rating. They are of the view that JLR margins can decline as the company aims to add more varieties to its portfolio.

Revenue from operations increased 42 percent to Rs 1.02 lakh crore in the quarter under review. Earnings before interest, taxes, depreciation, and amortisation (EBITDA) for the quarter stood at Rs 14,700 crore, up 177 percent, the company said in an exchange filing on July 25.

JLR, Tata Motors’ British arm, posted a 57 percent increase in revenue to £6.9 billion. This improvement was driven by robust wholesales and a better product mix. However, commercial vehicle (CV) volumes saw a decline of 15 percent compared to the previous year, primarily attributed to the transition to BS6 Phase 2.