Tata Motors gains 4% on heavy volumes; stock surges 12% in one month

Shares of Tata Motors were trading higher for the third straight day, surging 4 per cent to Rs 423.80 on the BSE in Tuesday’s intra-day trade amid heavy volumes ahead of Jaguar Land Rover (JLR) third quarter results.

The average trading volumes at the counter more-than-doubled today, with a combined 19.24 million equity shares changing hands on the NSE and BSE till 11:43 AM. In comparison, the S&P BSE Sensex was up 0.19 per cent at 61,059.

JLR, a wholly-owned subsidiary of Tata Motors, on January 9, said that the company expects to report unaudited results for the third quarter ending December 31, 2022 (Q3FY23) on January 25, 2023. Similarly, Tata Motors and Tata Motors DVR too will be reporting earnings tomorrow.

“On a preliminary basis, free cash flow is likely to be over £400 million positive in the quarter. In December 2022, the Company completed a renewal of its undrawn revolving credit facility with 23 banks at £1.45 billion with the maturity date extended from March 2024 to April 2026,” Tata Motors said in an exchange filing.

JLR said that the company continues to see strong demand for its vehicles. As of Q3FY23, the total order book increased to 215,000 client orders, up around 10,000 orders from Q2FY23. Demand for the New Range Rover, New Range Rover Sport and Defender remained strong and represent 74 per cent of the order book, the company had said. CLICK HERE FOR DETAILS

Meanwhile, in past one month, the stock price of Tata Motors rallied 12 per cent as the Global brokerage CLSA, upgraded stock to 'Buy' on the back of its belief that recovery in Jaguar Land Rover’s sales volume, along with improvement in margin profile, will aid the company’s free cash flow in financial year 2023-24 (FY24).

CLSA's upgrade comes after JLR reported higher wholesale volumes in Q3FY23 amid gradual improvement in chip supplies. It has set a target price of Rs 512 on the scrip, which implies 21 per cent upside from current levels.

On the JLR front, demand prospects are healthy with pending order backlog of 2.15 lakh units as of CY22 end. With supply chain issues easing analysts at ICICI Securities expect it to swiftly ramp up production and report a better financial performance, going forward. It is also readily adopting the electric vehicle (EV) transition with Jaguar going all electric by 2025 and new EV model launches planned in LR domain.

Incrementally, positives are the closure of Ford’s Gujarat plant deal in the domestic electric passenger vehicle domain (capacity expandable up to 4.2 lakh units) and board approval for partial stake sale of the company’s holding (74.4 per cent stake) in Tata Technologies (E&RD firm working on new technologies like ADAS) through IPO route (adds around Rs 50/share to our fair value calculation), the brokerage firm said in January 11, report.

Analysts expect the share price to head towards Rs 470, which is 61.8 per cent retracement of the decline since November 2021 high Rs 537 to December 2022 low of Rs 375.

Meanwhile, Tata Motors on Monday said the voluntary delisting of its American Depositary Shares, representing ordinary shares, from the New York Stock Exchange will become effective close of trading on January 23, 2023.

After Monday, there will be no over-the-counter market trading of the American Depositary Shares (ADSs) in the US due to regulatory restrictions under the Indian law, Tata Motors said in a regulatory filing.