“JLR maintained its 4Q guidance and expects chip constraints to ease gradually. It has strong order book with 74% of orders for new RR, RR-Sport & Defender. We now expect a lower net loss in FY23 and raise FY24-25E EPS by a slight 3-5%. Despite the near-term pressures at JLR, we like Tata given the cyclical recovery and improved franchise in India, early leadership in India EVs, and JLR focus returning to higher-margin Land Rover models. We retain Buy on Tata Motors shares with a target price of ₹565 (earlier ₹540 PT)," said brokerage Jefferies.
JLR posted third-quarter profit before tax of 265 million pounds ($326.2 million), compared with a loss of 9 million pounds a year earlier, helped by higher sales and better product mix and pricing.
Tata Motors (TML) turned in Q3FY23 EBITDA of INR96bn, beating Edelweiss' estimates by 20% as margins surprised positively. Q3 compensates for 28% miss of Q2. “Despite Q2’s weak show, we had largely maintained our estimates on expectation of benefit of commodity and mix. However, we are disappointed with weak JLR volume ramp up commentary and it remains the most important monitorable," said the brokerage.
“While demand outlook remains strong for JLR (due to production bottlenecks), initial signs of moderation was hinted by management for PVs (higher time for enquiry to retails) as well as ILCV and SCV. We expect same to compensate by commodity benefits. 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 while retaining ‘Buy’ with SoTP-based target price of ₹502 per share.
The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.
