As Jaguar Land Rover (JLR) announced excellent fourth-quarter sales and anticipated $1 billion in free cash flow, Tata Motors Ltd. (TAMO.NS) shares jumped as much as 8.15% to a seven-month high on Monday.
Tata Motors’ shares led the Nifty 50 index (.NSEI) up 0.33% and the auto index (.NIFTYAUTO) up 1.16%.
On Thursday, JLR reported a 24% increase in wholesale volumes, excluding China, in the January-March quarter, while retail sales rose 30% as chip and other supply restrictions eased. Tata Motors’ quarterly worldwide wholesales grew by 8%.
JLR’s strong sales in the October-December quarter helped Tata Motors post its first profit in two years.
“The market is underestimating JLR’s EBIT margin potential from forthcoming phase of wholesale volumes,” Goldman Sachs wrote.
To reflect JLR’s better volume expectation, the brokerage upgraded Tata Motors’ shares to “buy” from “neutral” and upped its target price to 550 rupees.
Refinitiv data shows that 32 analysts covering the stock have a “buy” recommendation and a consensus price objective of 520 rupees.
Tata Motors’ shares peaked at 473.30 rupees before falling to 463.75 rupees in early afternoon trading, up 6%.
Axis Capital predicted robust volume recovery and free cash flow generation in JLR, rising margins in the commercial vehicle industry, and the ramp-up of electric car volumes in the domestic passenger vehicle market.
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