Tata Motors Shares Soar to 52-Week High Following Stellar Q3 Results
In an exceptional display of financial performance, Tata Motors’ share price soared over 7% to hit a new 52-week high at the start of trading on Monday. The surge came on the back of the automotive giant reporting a remarkable set of numbers for the third quarter of the fiscal year 2024.
The shares of Tata Motors ascended as much as 7.19% to ₹942.00 each on the Bombay Stock Exchange (BSE), reflecting the market’s positive reaction to the company’s robust results.
For the quarter ended December, Tata Motors reported a net profit of ₹7,025 crore, marking a phenomenal 137.5% increase from ₹2,957.71 crore in the corresponding quarter of the previous year.
This impressive jump in profits was primarily fueled by a strong demand for both passenger and commercial vehicles, strategic price hikes, and an improved product mix. The company’s revenue for the third quarter surged 24.9% year-on-year (YoY) to ₹110,577 crore from ₹88,489 crore, showcasing the significant growth trajectory Tata Motors is on.
A notable contributor to Tata Motors’ revenue was its British luxury car unit, Jaguar Land Rover (JLR), which saw its revenue jump to ₹76,665 crore from ₹58,863 crore YoY.
The operational performance during the December quarter saw significant improvement, with EBITDA rising by 42.5% YoY to ₹15,333 crore and the EBITDA margin expanding by 171 basis points to 13.94%.
This stellar performance did not go unnoticed by global brokerage firms. Jefferies, a leading brokerage firm, uplifted its FY24-26 earnings per share (EPS) estimates for Tata Motors by 7-11%, maintaining a ‘Buy’ rating on the stock and increasing the target price to ₹1,100 per share.
Similarly, Nomura highlighted that Tata Motors’ Q3 JLR margins were ahead of estimates, suggesting a potential for further re-rating, especially with the anticipated success of electric vehicles (EVs) possibly driving JLR’s re-rating. Nomura holds a ‘Buy’ call on the stock with a target price of ₹1,057 per share.
Despite Tata Motors’ consolidated EBITDA coming in 3% below Kotak Institutional Equities’ estimates, the JLR and domestic commercial vehicle (CV) business EBITDA exceeded expectations due to raw material tailwinds and a richer product mix.
However, the domestic passenger vehicle (PV) business EBITDA faced impacts due to higher product development expenses toward EVs.
Kotak Institutional Equities remains optimistic about Tata Motors’ performance for FY2024-26, driven by improvements in the JLR business, steady demand trends, market share gains in PV and CV segments, and a net cash balance sheet by FY2025E.
The brokerage firm has revised its FY2024-26 consolidated EBITDA estimates upwards by 1-3% and JLR EBITDA assumptions by 2-4%, attributing this to a richer product mix and cost-control measures. Consequently, Kotak Equities upgraded Tata Motors stock from ‘Reduce’ to ‘Add’ and raised its target price from ₹800 to ₹950 per share.
Tata Motors’ share price has witnessed an impressive rally, gaining over 11% in the last month and more than 44% over three months. The stock has more than doubled investors’ money over the past year, with a surge of over 110% during the period.
As of 9:20 am, Tata Motors shares were trading 6.88% higher at ₹939.25 apiece on the BSE, closing at 5.47% (926.80) indicating strong market confidence in the company’s growth prospects and strategic direction.