During the October-December quarter, Tata Motors shares surged by 24%, outperforming the Nifty 50, which saw a 10.7% increase over the same period. Additionally, the stock achieved a new high on January 31 in anticipation of its results announcement.
Tata Motors is poised for substantial growth in net profit and revenue during the fiscal third quarter, driven by the robust expansion in Jaguar Land Rover volumes, implemented price hikes, and an enhanced product mix. The automotive giant is scheduled to unveil its Q3 FY24 results on February 2.
Based on the consensus of six brokerages, it is anticipated that Tata Motors’ net profit will witness a significant year-on-year increase of 54% to reach Rs 4,547 crore in the October-December quarter. Revenue is expected to register a 22% year-on-year growth, reaching Rs 1,08,169 crore. Additionally, the EBITDA margin is projected to experience a notable surge, increasing by 273 basis points to 13.63 percent.
Jaguar Land Rover’s wholesale volumes outside of China recorded a notable 27% year-on-year growth, reaching 101,043 units in the quarter. This figure marks the highest quarterly volume for the company in the last 11 quarters.
To enhance Tata Motors’ profitability, Nomura suggests a potential shift in focus towards elevating JLR into a more premium brand, particularly with the introduction of the new Jaguar EV priced at approximately GBP 100,000. The brokerage anticipates that emphasizing the Average Selling Price (ASP) and margin could contribute to increased profitability, especially if the new launches prove successful. Nomura views this strategy as apt for the EV market, considering the intensifying competition at the lower price points.
Motilal Oswal anticipates robust Jaguar Land Rover (JLR) volumes in the future, attributing it to the alleviation of chip shortages and the positive reception of new launches.
Brokerage firms are optimistic about Tata Motors’ strong EBITDA margin in Q3, primarily driven by improved pricing. Nuvama projects a 210 basis points expansion in EBITDA margin, citing advancements in both the JLR and India Commercial Vehicle (CV) division. Emkay Global concurs, asserting that margin expansion will occur due to enhanced scale and pricing in the JLR segment.