Tata Motors shares jump 5% intraday despite company reporting losses: What's driving the stock?

Despite the consolidated net loss being widening, the auto major Tata Motors’ shares jump 5 per cent to touch a day’s high level of Rs 509.95 per share on the BSE intraday trade in Tuesday.

The stock perhaps gained on the back of the company’s UK-based subsidiary - Jaguar Land Rover reported healthy operational performance in second-quarter of the financial year 2021-22. July-September quarter (Q2FY22). 

Moreover, Tata Motors management also in its results commentary expressed that JLR expects to see gradual recovery starting in the second half (October-March) of FY22.

“While supply remains constrained, JLR will continue to take mitigating actions, including prioritising the production of higher-margin vehicles for the available supply of semiconductors and closely managing costs to bring down the break-even point for the business,” the company added.

Tata Motors reported a consolidated net loss of Rs 4,441 crore during the quarter as compared to Rs 314 crore in the same quarter a year ago period, amid commodity inflation and supply chain issues. While its consolidated revenue grew by 14 per cent year-on-year to Rs 61,378 crore in Q2FY22.

At around 02:18 pm, the counter was trading around 1 per cent higher at Rs 490.4 per share on the BSE, as compared to 0.3 per cent rise in the S&P BSE Sensex. 

Jefferies maintains a Buy call on Tata Motors and expects demand recovery, market share gains and better margin should continue to help India business. It believes JLR’s worst chip shortages are behind and volumes should gradually improve.

The brokerage firm says, the company is seeing good demand, has a strong order book, while next gen RR/RR-Sport launches should boost JLR volumes. It sets a price target of Rs 625 per share. 

The company’s passenger vehicle (PV) business continued its turnaround journey and strengthened its double-digit market share with decade-high quarterly sales. While EV business recorded nearly three-fold growth and recorded the highest monthly (1,078 units) and quarterly sales (2,704 units).