CLSA Bullish on Tata Motors: Maintains ‘Outperform’ Rating Amid Rising JLR Volumes 1

  • CLSA maintains ‘outperform’ rating on Tata Motors.
  • Jaguar Land Rover (JLR) retail volumes up by 4.5% YoY in February.
  • Target price set at Rs 1,133, signaling over 15% upside.
  • Tata Motors’ stock likely to gain on March 26.
  • Analysts foresee strong profitability with JLR volume growth.
  • Recent demerger announcement aims to streamline operations.
  • Elara Securities gives an “accumulate” rating with Rs 935 target price.
  • JLR’s order book reduction strategy and production ramp-up initiatives highlighted for future

Introduction :

CLSA maintains its “outperform” judgement on Tata Motors, citing improved retail sales for Jaguar Land Rover (JLR). This favourable prognosis is accompanied by a target price of Rs 1,133 per share, indicating a possible gain of more than 15%.

Increasing JLR Retail Volumes :

Jaguar Land Rover, Tata Motors’ main subsidiary, saw a 4.5 percent year-on-year growth in retail sales in February. This increase in volume indicates a healthy trend for the company’s performance.

Market Expectations :

Tata Motors’ stock is projected to rise on March 26, boosted by CLSA’s bullish outlook in the face of rising JLR retail volumes. The stock is already up more than 25% this year, outperforming the Nifty auto index.

Strong profitability forecast :

CLSA analysts forecast excellent profitability for Tata Motors, citing a 10% year-on-year growth in JLR retail volumes in the first two months of 2024. This increase in volumes is positive for the company’s financial health.

Segment Demerger Announcement :

Tata Motors has announced the separation of its commercial vehicle (CV) and passenger vehicle (PV) businesses. This restructure will result in two separate publicly traded corporations, including domestic PV, electric vehicles (EVs), and Jaguar Land Rover (JLR). The move attempts to streamline operations and increase shareholder value.

Market Analysts’ Views :

Elara Securities analysts are likewise optimistic about Tata Motors, giving it a “accumulate” rating and a target price of Rs 935 per share. They identify JLR’s order book reduction strategy and production ramp-up measures as critical drivers of future growth.

CLSA’s insights :

CLSA’s analysis highlights JLR’s ability to expand its market share in the domestic passenger vehicle segment. While Jaguar saw increased discounts in February, Land Rover saw a decrease. Despite these variations, CLSA remains optimistic about Tata Motors’ overall performance.

Conclusion :

Tata Motors continues to receive positive attention from market analysts, with CLSA keeping a “outperform” rating due to rising JLR retail volumes. Investors are more confident in the company’s long-term prospects after it announced a planned demerger and focused on improving operational efficiency.

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