Tata Motors turned profitable in the fourth quarter of FY23, reporting a consolidated net profit of ₹5,407.79 crore against a net loss of ₹1,032.84 crore in the same quarter a year ago. Sequentially, the Q4FY23 net profit saw a growth of nearly 83%.
The company’s revenue from operations increased to ₹1,05,932.35 crore in Q4FY23 from ₹78,439.06 crore in Q4 of previous fiscal. The revenue in the quarter ended December 2022 was at ₹88,488.59 crore.
Tata Motors’ volumes continued to improve on strong domestic demand and better supplies at Jaguar Land Rover (JLR), it said, adding that pricing actions and a richer mix led to improved ASPs and higher revenue growth. Easing inflation, better mix, pricing actions, and favorable operating leverage resulted in strong improvements in margins and profits.
The company’s board also recommended a final dividend of ₹2 per ordinary share and ₹2.1 per share for DVR shareholders.
Brokerages reacted positively to Tata Motors Q4 earnings with most of them increasing their target price on the stock. Here’s what brokerages said:
Goldman Sachs
Goldman Sachs said favorable Jaguar Land Rover (JLR) outlook and domestic Electric Vehicle (EV) catalysts setup strong FY24. The Q4 beat with EBITDA/PAT exceeding consensus by +6%/+105% as JLR margins surprised to upside, led by favorable mix, pricing and progress on lean initiatives
The brokerage maintained a Buy rating on Tata Motors and raised target price to ₹600 per share from ₹550 per share.
Also Read: Tata Motors share price hits new 52-week high after Q4; 5 key triggers for the stock ahead
Nomura
The brokerage said that Tata Motors’s Q4 was broadly along expected lines and expects margins to trend up across segments and debt reduction is a key catalyst.
Tata Motors is trading at 4.3x its FY24 EBITDA, Nomura siad, adding that rising JLR production and debt reduction would be important catalysts.
It has a Buy rating on the stock and raised the target price to ₹610 from ₹508 per share.
Also Read: Tata Motors DVR share price soars on dividend news: What are DVR stocks?
Jefferies
Jefferies has a Buy call on the stock and increased the target price to ₹665 per share. It said Q4 EBITDA rose 47% YoY, in-line with estimates, to a new high.
EBITDA per vehicle rose 7-24% QoQ across JLR & India CV/PV. Net auto debt fell 24% QoQ. The company aims to deliver more than £2 billion free cash flow in FY24, the brokerage highlighted.
Motilal Oswal
Motilal Oswal reiterated a Buy call on the stock with a March’25 SOTP-based target price of ₹590.
“Tata Motors’ Q4FY23 result was a strong beat across businesses. India businesses are focused on margin expansions as volume growth is likely to moderate in FY24,” the brokerage said.
It expects Tata Motors should witness a healthy recovery as supply-side issues ease (for JLR) and commodity headwinds stabilize for the India business.
“It will benefit from the CV upcycle and stable growth in PVs, company-specific volume/margin drivers, and a sharp improvement in FCF as well as reduction in net debt in both JLR and the India businesses,” Motilal Oswal said.
The stock trades at 17.3x/15.0x FY24E/FY25E consolidate P/E and 4.4x/3.8x EV/EBITDA. It upgraded consolidated EPS by 13%/6% for FY24E/25E to factor in JLR’s volume ramp up as well as moderation in certain costs, and margin improvements in India businesses.
Also Read: DMart Q4 results: Share price falls over 4% as Q4 margins disappoint
ICICI Securities
The domestic brokerage maintained a Buy rating on Tata Motors and increased the target price to ₹620 from ₹608 earlier, implying ~10x FY25 India business and 2.5x JLR EV/EBITDA.
“Tata Motors executed strong show across key verticals in Q4FY23 with CV EBITDAM crossing the 10% mark after 4 years and JLR delivering a strong around GBP 815 million FCF. India PVs reported flattish 7% margin as rising scale of loss-making EVs resisted the EBITDAM of India PVs to cross the 10% mark,” ICICI Securities said.
With chip supplies improving, JLR is aiming to cross 400,000 wholesales ex-CJLR in FY24, implying a quarterly run rate of 90,000 plus units to sustain ahead.
Management is aiming at GBP 2 billion of FCF for JLR in FY24, which the brokerage believes is doable, even after factoring the slight increase in capex outlook to GBP 3 billion p.a. from FY24.
At 10:35 am, the shares of Tata Motors were trading % higher at ₹apiece on the BSE.
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