Brokerages raise Tata Motors price target on good Q2 numbers

Some brokerages raised their target price on Tata Motors after its subsidiary Jaguar Land Rover posted a sharp improvement in operational performance in the September quarter. However, not all analysts are convinced about a turnaround as free cash flow concerns around JLR persist.Tata Motor shares jumped 16.5 per cent to Rs 147.95 in muhurat trading on the BSE on Sunday. The Indian stock markets were shut on Monday due to Diwali Balipratipada.Kotak Institutional Equities maintained a buy rating on the stock and raised the fair value to Rs 200 from Rs 190. CLSA upgraded the stock to a buy after recommending a sell for almost three years and raised the target price to Rs 190 from Rs 120.Some brokerages said investors are unlikely to rush to buy Tata Motors shares because of betterthan-expected results in one quarter. “The worst seems to be behind as TML’s efforts are beginning to make a mark. That said, macroeconomic risks – domestic and global – persist,” said Edelweiss.The brokerage raised its target price on the stock to Rs 140 from Rs 134 but retained a hold rating as an uncertain demand environment and negative free cash flow for JLR through FY21 are likely to cap Tata Motors’ valuation. Ambit Capital said one should not read too much into JLR margins. 71799015 “It will be too early to turn positive on TTMT (Tata Motors) due to one quarter of strong performance by JLR as we are yet to see any green shoots of sustainable strong profitable growth for JLR,” said Ambit, retaining a sell rating on the stock.JP Morgan said the positive surprise from JLR was a relief and the stock may rally from current depressed valuations but it remains neutral on the stock as negative free cash flow concerns at JLR persist and it needs to be seen if margin improvement sustains amid macro and industry headwinds.JLR’s revenue increased 8 per cent year-on-year to £6.1billion, driven by higher wholesales (up 2.9 per cent) and a favourable product mix, Tata Motors said on October 25. The company’s performance in China improved sharply, up 24.3 per cent, it said.

from Economic Times https://ift.tt/31SQ8w6