on BSE, Tata Motors shares closed 404.35 each, an increase of 8.67%. Shares touch intraday highs 415.75 per. Overall, shares are up at least 11.73% today.
Shares of Tata Motors remained at this level last day 372.10 each.
In Q4FY22, Tata Motors reported a net loss of 1,033 crore for the quarter ended March 31, 2022 (Q4FY22) – much less than the loss 7,605 crore in the same period last year. Consolidated revenue declined 11.5% year-on-year 78,439 crores. EBITDA margin declined 320 basis points to 11.2% in the quarter.
Despite the decline in the top-line front, Tata Motors cut losses and lifted the market sentiment. Further, the company continued to show recovery in its commercial vehicles business by recording revenue of Rs. 18,529 crores, up 29.3% year-on-year – highest ever quarterly revenue since Q4FY19. In addition, the passenger business also gave a broader turnaround with revenue 10,491 crore in Q4FY22, an increase of 62% year-on-year – highest ever quarterly revenue. Notably, electric volumes increased to 9.1K units in Q4 and PV market share increased to 13.4% (+440bps).
Its luxury car firm, Jaguar Land Rover, reported revenue of £4.8 billion in the fourth quarter of fiscal year 2012, up 1% from the third quarter of fiscal 2012, marking the runout of the previous generation Range Rover with the new Range Rover. Reflects higher wholesale sales, partially offset by the impact of . prepare. EBIT margin in the quarter was 2.0%, with a profit before tax of about £9 million at breakeven before the £(43) million extraordinary charge for their business in Russia. Free cashflow increased from £164 million in Q3 to £340 million.
Tata Motors plans to become debt free by FY24. Its free cash flow has shown signs of steady improvement.
In its outlook, Tata Motors said, “Demand remains strong despite geopolitical and inflationary concerns. Supply conditions are improving gradually, while commodity inflation is likely to remain elevated. We expect Do expect performance to improve during the year as China COVID-19 semiconductor supply improves and aims to deliver strong EBIT recovery and free cash flow in FY23 to be net auto debt-free by FY2024 “
There is a possibility of further upside in the shares of Tata Motors. An investor, in particular, will reap huge gains with the stellar performance of Tata Motors on the stock exchanges. That would be none other than Rakesh Jhunjhunwala, the big bull of Dalal Street!
As on March 31, 2022, Jhunjhunwala holds 39,250,000 equity shares or 1.18% in Tata Motors. As per Trendline data, as of today, the holding value of this legendary investor is approx. 1,611 crore in the company. The data also shows that Tata Motors is among the top five stocks in Jhunjhunwala’s portfolio in terms of value.
Shares of Tata Motors have gained over 33 per cent in a year on Dalal Street. Shares were around on May 14 last year 312 each level.
Jhunjhunwala picked up shares of Tata Motors in September 2020. Shares of Tata Motors have gained about 182% since September 2020.
Trigger for Tata Motors shares to run!
ICICI Direct’s Research Analysts Shashank Kanodia and Raghavendra Goyal have put forward ‘Buy’ recommendations on Tata Motors shares after the fourth quarter earnings. Analysts set target prices 500 on this Tata Automobile flagship.
According to both, the share price of Tata Motors has remained flat over the past five years (at Rs 430 level in May 2017), which is lower than the Nifty Auto index. “We maintain a positive demand outlook, impressive margins and BUY on FCF targets for FY23E and intend to be net debt-free (automotive) by FY24E,” he added.
In terms of target value and valuation, analysts said, “We now value TML 500 on SOTP basis (10x, 3x FY24E EV/EBITDA on India, JLR; 160 value to the Indian EV business; First T.P. 550).”
Furthermore, these analysts highlighted four trigger points for future price performance at Tata Motors. This:
Firstly, analysts at ICICI Direct expect a healthy 13.2% revenue CAGR in FY22-24E amid a strong order book in JLR (1.68 lakh units) with total volumes CAGR of 15.8%.
Secondly, cost control for the ongoing deleveraging push, FCF generation targets led by efficiency improvements (net automotive debt in FY22) 48,700 crores).
Third, sustained EVs in India through concepts and actual launches (PV market leader with Nexon; plans to introduce 10 models by 2025) and JLR (Jaguar all-electric by 2025; 6 BEVs in Land Rover over the next five years) Alertness.
Lastly, he added that FY24E has seen margins at 14.3% and ROCE at ~13.7%.
As compared to Thursday’s stock price level with ICICI Direct’s target price, Tata Motors has the potential to rise over 34% in the stock.