Tata Motors Stock Price: If you are looking for a frontline stock to invest then you can keep an eye on Tata Motors shares. You are getting Tata Motors at a good discount from its annual high. The company’s outlook for the future looks better. Brokerage house LKP Securities has advised to buy the stock with a high target price. Brokerage house LKP Securities has advised to buy Tata Motors stock with a new target price of Rs 970. Which is 34 percent more than the current price of Rs 722.
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Stock at 39% discount from 1 year high
Tata Motors shares are trading at about 39 percent discount from their one-year high. The share price on July 30, 2024 was Rs 1179. Whereas today it was trading around Rs 722. In this respect, it has become about 39 percent weaker than its one-year high. The stock has weakened by 7.50 percent in 1 month. At present it can show a rise of 34 percent from here.
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Domestic CV demand also expected to increase
According to the brokerage house, in the last quarter, JLR recorded EBITDA margin of 11.7%, which was 350bps lower due to negative operating leverage and higher marketing spend. India Business (CV+PV) EBITDA margin was 9.5 percent. While the US market remains healthy, the demand environment in the European Union remains calm. Management indicated strong growth in H2 due to reduced supply constraints and prudent cost management. Marketing spend is expected to remain high.
Healthy FCF generation is expected to support JLR’s investments towards electrification and the company is on track to achieve net cash generation by FY25. In the domestic PV segment, Tata Motors saw strong growth during the festive season. Recent/new launches are expected to support growth. Domestic CV demand is also expected to increase during H2.
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JLR business will gradually improve
The brokerage believes Conso EBITDA estimates for FY25-27E will be driven by (1) lower gross margin assumptions for JLR due to weak demand trends in luxury cars, particularly in China and Europe, resulting in higher discounts and (2) lower volume assumptions for the PV and CV business due to weaker retail sales and higher inventory levels, partially offset by PV and CV This will be offset by higher profitability assumptions in the segment.
The brokerage believes there will be near-term headwinds for all three businesses, but expects (1) domestic CV business to recover from FY26E, led by increased government spending on infra and construction projects, (2) supply JLR business to gradually improve in H2FY25 due to normalization of chain issues and (3) growth in PV segment on the back of new launches in multiple powertrains Market share will improve in FY26-27E.
How were the company’s results?
Tata Motors’ profit declined by 9.9 percent to Rs 3,450 crore in the September quarter. The company’s profit has declined mainly due to decline in sales. The operating income of the company has declined to Rs 1,00,534 crore, which was Rs 1,04,444 crore in the same quarter of the last financial year. The company’s total expenses stood at Rs 97,330 crore in the September quarter, which was Rs 1,00,649 crore in the same quarter of the last financial year. Tata Motors said that JLR’s income declined by 5.6 percent to 6.5 billion pounds in the September quarter.
(Disclaimer: The view or advice on the share is given by the brokerage house. These are not the personal views of Financial Express. There are risks in the market, so take expert opinion before investing.)
