Tata Motors jumps 7% as JLR's Q2 sales grow 53% QoQ; CLSA maintains 'Buy'

Shares of Tata Motors jumped 7 per cent to Rs 143 on the BSE on Tuesday after Jaguar Land Rover's retail sales in the September quarter grew over 50 per cent from sales in the preceding quarter. Retail sales for the quarter ending September 30, 2020 were 113,569 units, up 53.3 per cent from sales of 74,067 in the prior quarter.

"Almost all of Jaguar Land Rover's retailers worldwide are now open or partially open and the company's plants have resumed production... The vehicle manufacturing plants at Solihull (UK), Halewood (UK) and Nitra (Slovakia), as well as the Engine Manufacturing Centre (UK), have now increased to a two-shift pattern to meet increasing demand," the company said in a statement. READ HERE

While the sales have improved on a sequential basis, they continue to be impacted by Covid-19. Retail sales were still down 11.9 per cent from pre-Covid levels a year ago, the company said.

China sales were particularly encouraging, up 14.6 per cent on the prior quarter and 3.7 per cent year-on-year. The month of September also saw sales up 28.5 per cent year-on-year in China... Retail sales for other regions also significantly improved from the prior quarter, including the UK (+231.6 per cent), Europe (+78.8 per cent), North America (+21.3 per cent) and Overseas (+35.1 per cenr). However, sales in these regions have not yet recovered to pre-Covid levels a year ago: UK (-2.9 per cent), North America (-15.8 per cent), Europe (-19.8 per cent) and Overseas markets (-30.3 per cent).

"The company ended September with about £3 billion of cash and short-term deposits, up £0.3 billion, primarily reflecting positive free cash flow as expected in the quarter. Total liquidity was about £5 billion, including the company’s £1.9 billion revolving credit facility, which remains undrawn," the management said.

According to reports, global brokerage CLSA expects Tata Motors to generate strong free cash flow on the back of sequential recovery in sales volume. The brokerage has 'Buy' call on the stock with a target price of Rs 220.

Those at Motilal Oswal Financial Services, meanwhile, believe that the stock is trading at 12.2x FY22E consol. EPS and 0.9x P/B, nudging them to have a target price of Rs 226 and a 'buy' call. 

TaMo biz

Tata Motors' sales in the domestic and international market, for Q2FY21, stood at 1,10,379 units compared to 1,05,031 units during Q2FY20. Of these, total domestic sales were 44,444 units, up 37 per cent from 32,376 units clocked in the year-ago period in the month of Septe,ber. For the whole of Q2, total domestic units were 106,888 units, 13 per cent YoY higher than 94,454 units.

"Tata Motors’ commercial vehicle domestic sales in Q2FY21 at 52,094 units was ~23 per cent lower than Q2FY20. However, it was significantly higher than the previous quarter (Q1 FY21) on the back of gradually increasing demand and improving supply situation. In Septembe'’20, the sale at 23,245 units was 38 per cent higher than last month while being 4.3 per cent below September'19. Offtake was higher than retail, as we prepare for sequential improvement in retails in the coming months," said Girish Wagh, President, Commercial Vehicles Business Unit, Tata Motors. READ HERE

Tata Motors posted solid growth of 112 per cent YoY in Q2FY21 at 54.8k units. PV sales stood at ~21.2k units, up 163 per cent YoY, maintaining its position as the 3rd largest player for third consecutive month as incremental market share gains are driven by relatively better demand for models like Altroz and Nexon, said an Octoer 2 note by ICICI Securities.

At 10:20 am, the stock was ruling 6.5 per cent higher at Rs 142.6 apiece on the BSE, as against 0.84 per cent rise in the S&P BSE Sensex. A combined 60.8 million shares had changed hands on the counter on the NSE and BSE till the time of writing of this report. So far in the current financial year, the stock has rallied 89 per cent on the BSE compared to 32 per cent gain in the benchmark Sensex, BSE data show.