Tata Motors Biggest Nifty Auto Loser After Jaguar Land Rover Sales Disappoint
While Nomura and Emkay are still positive on the stock, Motilal Oswal retained its neutral rating.
Tata Motors turned the biggest loser in Nifty Auto index, and one of the top laggards on Nifty 50 in early trade on Tuesday. The Nexon-maker fell as much as 3.66% today on the back of drop in wholesales and retail sales for Jaguar Land Rover Ltd. (UK) in the recently concluded September quarter.
The UK-based luxury car maker reported retail sales down 3% on annual basis at 1.03 lakh units for the period under review. Wholesales came in at 87,303 units, down 10% from the year-ago period.
The leading factor behind the drop in sales was supply chain disruptions from high-grade aluminum suppliers, which affected multiple carmakers.
Brokerages though, hold mixed views on the tepid show by Jaguar Land Rover. While Nomura and Emkay are still positive on the stock, Motilal Oswal retained its neutral rating.
Nomura Sees Strong Upside
Nomura retained its 'buy' on Tata Motors with a target price of Rs 1,303, implying a 40% upside from previous close.
While first half has been soft, Nomura estimates annual sales of Jaguar Land Rover at 4 lakh units in financial year ending March 2025. While this estimate indicates flat volumes on annual basis, it would mean 3% growth year-on-year in the second half of this fiscal year.
The brokerage also noted that a stronger mix of China—rising 800 basis points sequentially to 19.6%—and lower Jaguar mix will offset lower Range Rover and Range Rover Sport mix.
Emkay Retains Buy Rating
Emkay also retained its 'buy' on the stock with target price of Rs 1,175, marking an upside of 26% from previous close. The brokerage highlighted that commentary by the company around volume rebound is "encouragingly divergent" from luxury peers. BMW, Aston Martin and Volkswagen have cut sales guidance for this year citing demand weakness in China.
Emkay reaffirms their positivity given structural improvements across operational parameters with the company on track for becoming net-debt free in FY25.
But, Motilal Oswal Is Still Not Positive
Motilal Oswal has maintained its neutral rating with target price of Rs 990 for every Tata Motor share. This implies a 7% upside from previous close. The stance comes on the back of view that Jaguar Land Rover margins will remain under pressure till fiscal ending March 2026 on account of rising cost pressures and EV ramp up.
The brokerage has cut their revenue, Ebitda, and profit-after-tax estimates for Jaguar Land Rover to £6.4billion, £958 million and £247 million, respectively. These levels have been brought down by 5%, 3% and 8% from their previous estimates.
What to look forward to?
Tata Motors’ vehicle sales growth has been lowest amongst peers Mahindra & Mahindra Ltd and Maruti Suzuki India Ltd., which we highlighted post its September sales numbers.
The company is trying to course correct, with launches of the new Curvv in both EV and petrol avatars while reducing prices on most of their models by almost Rs 1 lakh. The onus of meeting the 5% sales growth guidance for the full fiscal now rests on both passenger and commercial segments.
