Tata Motors Share Price rises 12%, hits new 52-week high on strong sales in China

In the morning session on January 12, after CLSA retained the buy call on the stock, Tata Motors’ share price jumped over 12 percent.

With a target of Rs 270 per share, the worldwide research firm retained a buy rating. The JLR Q3 retail volume increased 13 percent QoQ and the proportion of EVs rose to 12 percent.

CLSA believes that JLR recovery should be powered by good FCF generation and deleveraging for the company and continues to forecast a sequential volume recovery for JLR. It added that in the market, Tata Motors remains their top pick.

The research firm rorecasts JLR/India CV/India PV Volume for FY20-23, Moneycontrol reports, to see CAGR of 0 percent/8 percent/28 percent respectively. JLR’s EBIT margin is expected to increase from 0 percent in FY20 to 5.7 percent in FY23, adding that auto net debt should decrease from Rs 48,700 crore in FY20 to Rs 33,300 crore in FY23.

Jaguar Land Rover (JLR), owned by Tata Motors, released its sales figures for 2020 on January 11, indicating a major hit as a result of the COVID-19 pandemic, but the company highlighted signs of recovery as sales in China remained strong.

For the calendar year 2020, Jaguar Land Rover retail sales were 425,974 vehicles, down 23.6 percent from 2019, reflecting the impact of COVID-19 on the industry, particularly in the first half of the year when plants were shut down for more than two months.

However, in the quarter ended September 30, 2020, the company said it has since seen a quarter-on-quarter increase in sales by over 53 percent, followed by a 13.1 percent increase in the most recent quarter, the report states.

For the quarter ended December 31, 2020, retail sales were 128,469 vehicles, 13.1% higher than the 113,569 vehicles sold in the previous quarter, but down 9% on the same period last year. The company said China’s revenues were particularly promising as they increased by 20.2 percent and 19.1 percent year-on-year over the previous quarter.

Reliance Securities Senior Research Analyst Vikas Jain suggests holding Tata Motors with a target of Rs 240. With the positive flow of news, the stock continued its positive momentum from its 34-month average of Rs 175 levels after its breakout.