Tata Motors Share Price Surges 12%, Hits New 52-week High on Strong China Sales

The share price of Tata Motors jumped over 12 percent in the morning session on January 12 after CLSA maintained the buy call on the stock.

The worldwide research firm retained a buy rating with a target of Rs 270 per share. The amount of JLR Q3 retail increased 13 percent QoQ and the share of EVs increased to 12 percent. According to a CNBC-TV18 survey, JLR retail sales were largely in-line with monthly trackers, it said.

CLSA believes that good FCF generation and deleveraging for the company should be powered by JLR recovery and continues to forecast a sequential volume recovery for JLR. It added that Tata Motors remains their top pick in the market.

The research firm rorecasts JLR/India CV/India PV Volume to see CAGR of 0 percent/8 percent/28 percent respectively for FY20-23, Moneycontrol reports. It feels that JLR’s EBIT margin should improve from 0 percent in FY20 to 5.7 percent in FY23 adding that the auto net debt should decline from Rs 48,700 crore in FY20 to Rs 33,300 crore by FY23.

On January 11, Tata Motors-owned Jaguar Land Rover (JLR) released its sales figures for 2020, indicating a major hit as a result of the COVID-19 pandemic, but the company highlighted signs of recovery as sales remained strong in China.

Jaguar Land Rover retail sales for the calendar year 2020 were 425,974 vehicles, down 23.6 percent on 2019, reflecting the effect of COVID-19 on the industry, especially in the first half of the year when plants were shut down for more than two months.

However, the company said it has since seen sales increase quarter-on-quarter by over 53 percent in the quarter ended September 30, 2020, followed by the 13.1 percent increase in the most recent quarter, the report states.

Retail sales for the quarter ending December 31, 2020 were 128,469 vehicles, 13.1 percent higher than the 113,569 vehicles sold in the preceding quarter, but down 9 percent on the same period last year. The company said China sales were particularly promising as they were up 20.2 percent on the prior quarter and 19.1 percent year-on-year.

Vikas Jain, Senior Research Analyst at Reliance Securities suggests holding Tata Motors with target at Rs 240. With the positive news flow, the stock continued its positive momentum after its breakout from its 34-month average of Rs 175 levels.

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