Tata Motors stock surges 4% on robust Q4 earnings

The Tata group's automotive company Tata Motors Ltd's stock surged 4% in the early morning trade on Monday after the company reported record profit in the January-March 2023 quarter.

The stock, which closed at ₹515.65 during the previous session, opened at ₹525 on Monday and surged to an intra-day high of ₹537.15. The stock is currently trading around 3.18% up at ₹532.05 on the BSE. At the current share price, Tata Motors' market capitalisation stands at ₹1,76,782.80 crore.

The rise in stock, however, is largely in line with a positive stock market rally today. The BSE benchmark, Sensex has surged 0.38% or 237.33 points to 62,263.23, while Nifty rose 0.36% or 66.65 to 18,381.50.

Tata Motors swung into profit in the last quarter of the financial year 2022-23 at ₹5,407.79 crore against a net loss of ₹1,032.84 crore in the same quarter last year. Its revenue jumped 35.1% to ₹1,05,932.35 crore as compared to ₹78,439.06 crore in the year-ago period.

The said quarter was one of the “strongest quarters” for Tata Motors, said the company, with EBITDA at ₹14,100 crore and net auto debt reduction of ₹13,800 crore during the quarter.

Tata Motor's volumes continued to improve on strong India demand and better supplies at Jaguar Land Rover. "Easing inflation, better mix, pricing actions, and favorable operating leverage resulted in strong improvements in margins and profits," the company said.

The company's board has recommended a final dividend of ₹2 per ordinary share (100% of face value) and ₹2.1 per share for DVR shareholders subject to approval by the shareholders at the annual general meeting.

In its outlook, Tata Motors said it is "optimistic" about the demand situation despite near-term uncertainties and expects a moderate inflationary environment in the near term. The company is aiming to further improve and deliver a strong performance in FY24. "The momentum is expected to build through the year factoring in seasonality, stabilization of JLR supply chain, and post RDE impact in India," the company said.

Brokerages have, meanwhile, retained 'buy' to 'add' recommendations on the Tata Motors stock. Jefferies has given a 'buy' call on the stock, with a target price of ₹665, and it foresees the company's India business and JLR unit performing well in FY24.

Prabhudas Lilladher has also given a 'buy' call on the stock, with an upside of 14% and a target of ₹590. With an upside of 20%, Nomura has maintained a 'buy' rating on the stock at ₹620. It expects a cyclical upturn in JLR and Tata Motor's India CV/PV segments. Likewise, Emkay has revised the target price to ₹565 on the stock, with an upside of 10%.

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