NEW DELHI: Shares of Tata Motors climbed 13 per cent in Tuesdays trade, in addition to a 16 per cent surge in the one-hour Muhurat trading session on Sunday, after the companys September quarter results raised hopes that the British arm JLR is back on track.The scrip jumped 13.52 per cent to hit a high of 167.95 on BSE.CLSA upgraded Tata Motors to buy after almost three years of 'Sell' rating.
The brokerage raised its target on the stock to Rs 190 from Rs 120.Foreign brokerage Nomura said that JLRs Ebit margins at 13.8 per cent were significantly higher than its estimates of 8.6 per cent.A 200 bps QoQ drop in variable marketing costs and a 200 bps drop in warranty costs helped.
This was partly helped by a strong model mix, which may come off somewhat.
However, with further potential for cost-cutting, we expect margin improvement to be stronger, it said.Macquarie has maintained its FY21-22 EPS estimates for Tata Motors post Q2 results, citing strong recovery in JLR profitability.
After seeing tepid volume performance for five quarters, JLR's volume growth has turned positive on strong growth from China and new products, said Emkay Global.The brokerage still expects flat volume in FY20 but has forecast improvement of 4 per cent growth in FY20-22E.This brokerage raised its target on Tata Motors to Rs 180 from Rs 155.Our target EV/Ebitda multiple is unchanged at 1.5 times FY21 for JLR at Rs 79 share is in line with global luxury OEMs and 8 times for the standalone business of Rs 38 per share.
We value investments at Rs 36 per share and arrive at target price of Rs 153, Nomura said.