Tata Motors shares: What should investors do post Q2 results?

JLR reported revenues of 5.3 billion pounds in the second quarter, up 36 per cent from the year-ago period. Its wholesale volumes (excluding China JV) stood at 75,307 units in July-September period, up 17.6 per cent as compared to the same period last year.

“Management indicated a marginal ramp-up in H2FY23 volume for JLR over H1. JLR is targeting to be FCF-neutral in FY23 versus an FCF-positive guidance earlier. India and JLR have tailwinds of cyclical recovery and product-cycle. This should aid balance sheet improvement—a key driver of our BRAVEHEART call,” said Edelweiss. It has maintained ‘Buy’ rating on Tata Motors shares with a target price of ₹502 apiece.

“Tata Motors’ Q2 results were operationally in-line to our estimates. JLR performance was better led by better than estimated ASPs and gross margins. The key positive from JLR results is its EBIT margins turned positive and management guidance of positive EBIT for FY23, expect 3QFY23 wholesales to be modestly better than 2QFY23, near FCF break even, not seeing major cuts in demand of premium PVs globally yet, indicating gradual volume ramp-up ahead,” said analysts at Yes Securities while maintaining a Buy tag on the auto stock with a target price of ₹534 per share.

We expect JLR EBITDA to be driven by improving chip supplies, normalizing inventories, higher mix of RR+RR Sport and higher product capitalization rates ahead. Meanwhile, we expect India business benefit to cyclical revival in the domestic CV industry and continued volume momentum for the PV business. With JLR likely to post nil FCF in FY23E, we believe turning net debt free by FY24E will be tough. We now expect TTMT to turn net debt free not before FY25E,” another brokerage Ambit while reiterating BUY with SOTP-based target price of ₹488.

The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.