Tata Motors on a roll: Should you ride this home-grown auto major now on D-Street?

Shares of Tata Motors extended their gains for the seventh straight session on Tuesday to hit a new six-year high. Meanwhile, the home-grown auto major hogged the limelight after the company on May 12 posted a consolidated net profit of Rs 5,408 crore for the fourth quarter ended in March 2023. It had reported a consolidated net loss of Rs 1,033 crore in the same quarter a year ago. Total revenue from operations stood at Rs 1,05,932 crore in Q4FY23 as against Rs 78,439 crore in the year-ago period.

Analysts on Dalal Street hold a positive view on Tata Motors' post-March quarter results. Brokerage ICICI direct has a ‘Buy’ call on the auto major with a 12-month target price of Rs 650, indicating an upside of 22 per cent from the current market price.

“We maintain a ‘Buy’ rating amid healthy profitability across all business segments, JLR’s volume recovery on the anvil, reiterated focus towards EV space at JLR coupled with healthy FCF (free cash flow) generation targets for FY24,” ICICI direct said.

Tata Motors is also owned by well-known investors of Dalal Street. The country’s biggest institutional investor Life Insurance Corporation of India (LIC) held a 5.21 per cent stake in the company as of March 2023. On the other hand, Rekha Jhunjhunwala, FIIs and retail investors held 1.57 per cent, 16.91 per cent and 14.26 per cent, respectively.

Phillip Capital is also bullish on Tata Motors with a target price of Rs 620. “Production at JLR ramping up due to greater availability of semiconductors, management is confident of producing 400k units for FY24. Given a strong order bank of 200k units and a favourable model mix expect the improved operating structure to aid margins and cash flow generation,” the brokerage said.

It further believes that commercial vehicle demand is expected to remain strong due to favourable macros (freight rates, utilisations, government push on infrastructure, ageing fleet, scrappage policy) and improving profitability in passenger vehicles are all aligning for the company. Given the exciting product lineup and new future launches for JLR and domestic PV business, Phillip Capital expects the order book to remain healthy.

Also Watch: Tata Sons' N Chandrasekaran conferred France’s highest order of merit; Ratan Tata, Azim Premji, other Indian businessmen honoured by foreign countries

Also Watch: Multibagger stock: LIC-backed Kirloskar Electric Company Share gives 420% return in 1 year. Do you own?

Also read: Birlasoft shares climb 7% amid high volume, up for 3rd day. What analysts say

Also read: MF stake in Adani Enterprises topped 1% in April; funds bought Adani Ports & Ambuja Cements shares, sold ACC stock