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HomeMarketStocksTata Motors Q2 print leaves Street stressed. What should investors do?

Tata Motors Q2 print leaves Street stressed. What should investors do?


NEW DELHI: After auto main reported a wider-than-expected quarterly lack of about Rs 945 crore, buyers began dumping the inventory on Thursday amid downgrade experiences. The counter dropped over 5% to hit the day’s low of Rs 409.30.

Whereas JP Mogran downgraded the inventory to impartial, Kotak Institutional Equities downgraded it so as to add. Whereas giving a goal value of Rs 455 on the inventory, JPMorgan mentioned JLR Q2 wholesales disillusioned whereas retails have been barely higher. Brokerages are additionally fearful that the Tata group firm’s zero web debt goal might get pushed past FY25 from FY24.

“We’ve got minimize our FY2023E consolidated EBITDA estimates by 19% as a consequence of decrease quantity assumptions for JLR and decrease EBITDA margin assumptions for the home enterprise,” mentioned Kotak analyst Rishi Vora, who sees the inventory’s honest worth at Rs 450.

Securities famous that Tata Motors posted weak efficiency in Q2, each at JLR and within the India enterprise. Whereas JLR margin lagged expectations, home PV and CV margins additionally declined QoQ as a consequence of excessive enter prices, it mentioned in a notice with a scale back score on the inventory and a goal value of Rs 415.

However, home brokerage YES Securities stays a bull on the inventory with a goal value of Rs 534. “We like TTMT given its enhancing India franchise, early management in EVs in India, and JLR’s aggressive price controls. Standalone enterprise is in a candy spot led by wholesome cyclical restoration each in PV and CV whereas beneficial product cycles assist drive JLR outperformance,” it mentioned.

‘s Vivek Kumar mentioned enhancing chip provides and decrease commodity prices will help margin. “Sequential enchancment was led by higher mannequin combine and value hikes partially offset by increased RM, engineering and advertising and marketing spends. India enterprise EBITDAM stood at 5.5%, -110bps decrease than JMFe pushed by commodity inflation. TTMT expects chip provides to progressively enhance via FY23,” he mentioned. The brokerage has a goal value of Rs 550 on the inventory for the following 12 months.

Securities believes decrease capex and enchancment in provide of semiconductor would help JLR, whereas enhancing PV enterprise, delayed decrease RM cost-benefit and deal with price management would enhance Tata Motor’s standalone margins.

“We consider that regardless of near-term challenges, structural enchancment throughout the segments is on observe. In view of the anticipated restoration of JLR’s international enterprise with doubtless ease on semiconductor provide, turnaround of PV enterprise put up restructuring of home enterprise coupled with enticing valuation, we reiterate our BUY score on the inventory and preserve the goal value of Rs 575,” it mentioned.

(Disclaimer: Suggestions, ideas, views and opinions given by the specialists are their very own. These don’t symbolize the views of Financial Instances)



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