Q2 Results: Analysts Hike Target Price For Tata Motors As Loss Narrows

Most analysts hiked their target price on Tata Motors Ltd. as its quarterly loss narrowed and it approved fundraising plans to pare debt.

The automaker’s net loss fell to Rs 216.50 crore in the quarter ended September from Rs 1,049 crore, the automaker said in an exchange filing. That compares with the Rs 1,635-crore consensus estimate of analysts tracked by Bloomberg. The company plans to raise nearly Rs 10,000 crore to pare debt.

Tata Motors’ operating profit rose 15 percent year-on-year to Rs 7,046 crore, while margin expanded 230 basis points to 10.8 percent. Margin of Jaguar Land Rover, its luxury car unit, was at a 13-quarter high of 13.8 percent.

Here’s what brokerages said on Tata Motors…

CLSA (Upgrade after three years of ‘Sell’ rating)

• Upgrade to ‘Buy’ from ‘Sell’ with target price hiked to Rs 190 from Rs 120.
• JLR’s volume is showing signs of bottoming out.
• JLR margin has started to recover after four consecutive years of contraction.
• Indian business will likely remain weak in FY20-21 on weak truck sales.
• Earnings in FY21-22 may rise 4-16 percent factoring in higher margin at JLR.

Kotak Institutional Equities

• Maintains ‘Buy’ with target price hiked from Rs 190 to Rs 200.
• Expect JLR to continue its momentum.
• Domestic commercial vehicle business to rebound in second half of current fiscal.
• Increase consolidated EBITDA estimates for FY2020-22E by 2-16 percent.

Antique Stock Broking

• Maintain ‘Buy’ with target price of Rs 197.
• Believe JLR is moving in the right model cycle zone.
• JLR back in black with a bang on better mix and cost savings.
• Steeper-than-expected commercial vehicle slowdown hurts standalone business.

Ambit Capital

• Maintain ‘Sell’ with target price of Rs 125.
• Improvement was led by higher JLR mix, favorable forex.
• Believe it will be too early to turn positive on Tata Motors, JLR.
• Yet to see any green shoots of sustainable strong profits for JLR.