Tata Motors hits all-time high as automaker beats Street estimates in Q3. Should you book profit or stay put?

Tata Motors share price NSE, Tata Motors Q3 results: Tata Motors settled as the top gainer on the Nifty50 index on Monday, February 5. The automaker gained as much as Rs 70.8, or 8.05 per cent, to clock an all-time high of Rs 949.6 apiece on BSE after the Tata Group auto giant—whose popular cars include Nexon and Punch—reported a better-than-expected set of financial results for the October-December (Q3 FY24) period. The counter settled at Rs 926.8, down by Rs 48 or 5.46 per cent on BSE. 

Tata Motors Q3 results 

Tata Motors on Friday reported a consolidated net profit of Rs 7,025.1 crore for the quarter ended December 31, 2023, marking an increase of 2.4 times compared with the corresponding period a year ago. Its revenue grew by one-fourth on a year-on-year basis to Rs 1,09,799.2 crore, according to a regulatory filing.

According to Zee Business research, the Tata Group auto major was estimated to register a consolidated net profit of Rs 4,100 crore and revenue of Rs 1,07,800 crore for the fiscal third quarter. Revenue from Tata Motors' commercial vehicles and passenger vehicles segments increased 19.2 per cent to Rs 20,100 crore and 10.6 per cent to Rs 12,900 crore, respectively, according to a statement.

Tata Motors registered a 60.6 per cent growth in earnings before interest, taxes, depreciation, and amortisation (EBITDA) to Rs 15,800 crore for the quarter under review. Revenue from JLR increased by 22 per cent to 7.4 billion pounds, Tata Motors said. Read more 

Tata Motors share price target: What do brokerages suggest?

Jefferies has maintained a buy call on Tata Motors and has raised the target to Rs 1,100 from Rs 950, the highest among its peers.

"3Q EBITDA grew 59 per cent YoY (+12 per cent QoQ) to a new high (9 per cent above JEFe). Tata expects a better 4Q, led by seasonality and improving supplies at JLR. Raise FY24-26 EPS by 7–11 per cent," Jefferies said in its note.

In addition, Nomura and Goldman Sachs, too, have continued with a buy call each on Tata Motors. While Nomura has raised the target to Rs 1,057 from 953, Goldman Sachs has raised the target by Rs 90 on the stock to Rs 960.

"3Q JLR margins ahead—further re-rating likely, Nomura said in its note. The company's estimated net debt is expected to go down further by Rs 150 per share by FY26F; the success of EVs could drive JLR's re-rating. 3Q JLR EBIT margins are ahead at 8.8 per cent. The counter trades at 5x FY26F EBITDA," Nomura added in its note.

Goldman Sachs, in its note, said, "3Q rev/EBIT +2 per cent/+9 per cent ahead of consensus as better than expected RR realisation and improving CV mix and pricing supported a 50bps EBIT margin beat."

HSBC has maintained a hold call on the counter with a raise in target to Rs 920 from Rs 730. Continued to beat estimates, led by benign global demand, pricing, and continued RR demand, according to HSBC.

According to HSBC, the near-term outlook is still strong and may keep stock buoyant; the launch of CURVV is a key monitorable for domestic business. The valuation looks too punchy, as per the brokerage.

Morgan Stanley has maintained an overweight call given to JLR driven by de-leveraging and EVs driven by PV turnaround. The brokerage has raised the target to Rs 1,013 from Rs 890.

Catch the latest stock market updates here. For all other news related to business, politics, tech and auto, visit Zeebiz.com.