Tata Motors Shares Surge to 52-Week High After Impressive Q1 Earnings; Should You Consider Buying?

Rajesh
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Tata Motors, the prominent automobile flagship company backed by Tata Group, has recently achieved a new 52-week high in its share price following better-than-expected Q1 FY24 results. The company's stellar performance was driven by a surge in Jaguar Land Rover (JLR) sales and steady passenger vehicle sales, resulting in a consolidated net profit of Rs 3,202.80 crore for the quarter. As a result, numerous brokerages have raised their target price for Tata Motors, indicating potential double-digit upside. This blog post provides an overview of Tata Motors' Q1 earnings and the expert opinions on whether you should consider buying or selling its shares.

Tata Motors


Tata Motors' Q1FY24 Performance:

In the first quarter of FY24, Tata Motors recorded a remarkable consolidated net profit of Rs 3,202.80 crore, a substantial improvement from the net loss of Rs 5,006.60 crore in the corresponding quarter of the previous year. The revenue from operations witnessed a notable 42.12% increase, reaching Rs 102,236.08 crore as compared to Rs 71,934.66 crore in Q1 FY23. The surge in profitability was mainly attributed to the easing of supply-chain constraints, which positively impacted sales of luxury brand Jaguar Land Rover. Additionally, passenger vehicle sales remained steady, further contributing to the impressive performance.

Expert Opinions:

Analysts from Motilal Oswal and Prabhudas Lilladher have upgraded their target price for Tata Motors, reflecting their positive outlook on the company's prospects. Himanshu K Singh, a Research Analyst at Prabhudas Lilladher, highlighted that they have increased their FY24/25E EBITDA estimates to factor in the company's guidance and Q1 results. The solid performance of JLR and the India CV business, along with a strong order book, are expected to drive strong revenue, profitability, and free cash flow. They maintain a 'BUY' rating with a SoTP-based TP of Rs 760.

Similarly, Motilal Oswal's analysts expect Tata Motors to witness a healthy recovery, with supply-side issues easing for JLR, better product mix, lower discounts, and operating leverage benefiting all three business segments. The brokerage retains a 'BUY' rating with a Sep'25E SOTP-based TP of Rs 750.

However, it's important to note that Kotak Institutional Equities raised its EBITDA estimates for Tata Motors but maintained a 'SELL' recommendation on the stock. They emphasized increased competitive intensity in the Chinese BEV market and market share loss in the CV segment as potential concerns. Kotak suggests a revised FV of Rs 600 based on SoTP methodology.

Conclusion:

Tata Motors has delivered a robust performance in Q1 FY24, with its net profit rebounding significantly and revenue witnessing a substantial increase. The positive market sentiment and the majority of brokerages raising their target price indicate a favorable outlook for the company's shares. Nevertheless, as with any investment decision, it is essential to conduct thorough research, consider expert advice, and assess personal financial goals and risk appetite before making any investment in Tata Motors shares.

Disclaimer: 

The information provided in this blog post is based on publicly available sources and the opinions of market analysts. The author of this post is not providing any investment advice, and readers are advised to consult certified financial experts before making any investment decisions. Trading talk. in encourages users to exercise due diligence and seek professional guidance for their investments.

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