Tata Motors Shares Shoot Up 6% On Jaguar Land Rover Optimism: Bullish Analyst Hikes Price Target To ₹608

Tata Motors managed to rake in quarterly net profit for the first time in two years after the company’s United Kingdom-based subsidiary Jaguar Land Rover Automation (JLR) impressed the most in the third quarter.

The Tata Analyst: ICICI Securities analysts led by Basudeb Banerjee held their “buy” rating on the stock, revising the price target from ₹571 to ₹608.

Tata Motors Q3 FY23 Numbers: Tata Motors on Wednesday reported a consolidated net profit of ₹2,958 crore in the third quarter of the current fiscal. The company reported a net loss of Rs 1,516 crore in the same quarter last fiscal.

Meanwhile, Jaguar Land Rover revenues stood at £6 billion (₹ 80,888 crore), up 28% compared with the same period last year. Tata Motors in its earnings call said it remains cautiously optimistic about the demand situation despite global uncertainties.

Analyst Color: Tata Motors’ performance in Q3 beat Banerjee’s expectations.

“Assisted by forex gains, improved operational performance and partial working capital reversal, JLR reported £490 million (₹ 4,951 crore) of FCF (free cash flow) during the quarter and we believe it is on course to end the year with a positive FCF of £100 million (roughly Rs. 1,010 crore),” mentioned ICICI Securities, in its latest report shared with Benzinga India.

With China beginning to open up after a series of lockdowns, dealer level inventory improving and a promising production outlook in Q4, ICICI Securities expects JLR to generate a similar level of FCF in Q4 too, resulting in FCF of £100 million in FY23.

The analyst also noticed an improvement in net pricing in Tata Motors’ commercial vehicle (CV) division and said further improvement is likely in the next quarter.

Price Action: Tata Motors surged 6%, marking a four-month high of ₹444.60 on the BSE in Friday's intra-day trade.