Tata Motors’ shares soared on Monday after the automaker’s worldwide wholesale car sales increased by 8% year on year in the March quarter, despite high inflation and increasing financing costs, exceeding analysts’ estimates.
Jaguar Land Rover (JLR) sold 1.07 lakh cars globally in the March quarter, with Jaguars accounting for 15,499 units and Land Rovers accounting for 91,887 units.
Tata Motors shares were the top gainers on the 50-stock Nifty50 index after its March quarter report, which indicated a turnaround in the plummeting JLR volumes.
Analysts have praised the automaker’s sales growth, citing a better chip supply and a better-than-expected booking run rate for JLR.
“All three businesses of Tata Motors are in a recovery mode. While the India CV (commercial vehicles) business will see a cyclical recovery, the India PV (passenger vehicles) business is seeing a structural recovery. JLR is also witnessing a cyclical recovery, supported by a favourable product mix,” said analysts at Motilal Oswal.
“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% of the sum of the parts (SoTP) will continue,” added the report.
In March, the company sold 46,847 cars, which was more than its competitor Hyundai sold in the United States.Hyundai, on the other hand, sold 45,703 vehicles in the same month.
Tata Motors’ sales of passenger cars grew by 27% year over year in March, which was a lot more than Hyundai’s 4.4% growth. In FY23, the former raised its market share to 13.39%, while the latter decreased its market share to 14.51%.
“We expect the demand for personal vehicles to remain robust with the trend of electrification further strengthening,” said Shailesh Chandra, MD, Tata Motors Passenger Vehicles.
| Brokerage house | Rating | Target price |
| Nomura | Buy | ₹508 |
| CLSA | Buy | ₹544 |
| JP Morgan | Neutral | ₹438 |
| BoFA | Buy | ₹475 |
| Goldman Sachs | Buy | ₹550 |
Goldman Sachs has upgraded Tata Motors to buy, raising the target price to ₹550 from ₹480 to reflect an improved volume expectation at JLR. It also increased its FY24–25 EBITDA expectations by 15%–16%, claiming that the market undervalued JLR’s EBIT margin potential.
EBITDA is an abbreviation for earnings before interest, taxes, depreciation, and amortisation, while EBIT is an abbreviation for earnings before interest and taxes.
Tata Motors’ shares have risen by 17% so far in 2023.
Moreover, the stock has been on an upward trend this year due to rising vehicle sales; Tata Motors shares are up 17% in 2023 thus far.
The carmaker has been on the mend since the December quarter, when it turned a profit for the first time in seven quarters.
Also, starting with the start of the new fiscal year, prices for cars were recently raised. Traditionally, manufacturers raise car prices beginning April 1. This time, price increases are being driven by rising inflation and regulatory constraints.
Together with Tata Motors, other manufacturers, including Maruti Suzuki, Honda, and Hero MotoCorp, have raised car prices to comply with new environmental regulations.
The Indian automobile sector is prepared to meet the tougher emission criteria imposed by Phase 2 of the BSVI regulations. Vehicles must be equipped with onboard diagnostic (OBD2) equipment beginning April 1 in order to meet the tougher emission standards.
