Brokerages mixed on Tata Motors post Q1 numbers

Brokerages have a mixed view on Tata Motors after the auto maker on Friday posted a higher consolidated net loss of Rs 8,437.99 crore. Some brokerages have raised target price citing favourable risk reward and rolling forward of valuations.

Ambit, Antique, Edelweiss, ICICI Securities and Motilal Oswal have maintained a buy, CLSA has upgraded the stock to buy from underperform and raised target price by 31.1% to Rs 135. Bank of America Securities has given underperform rating and Credit Suisse is neutral on the stock. Emkay Global has a hold rating and Nomura has a reduce rating.

Credit Suisse, Edelweiss, Emkay Global, ICICI Securities, Nomura and Ambit have raised target price by 4-30%.


CLSA said Tata Motors' first quarter results were a significant beat driven by aggressive cost reduction measures that the management had guided during the fourth quarter of financial year 2019-2020.

"While the recovery trajectory may be uncertain, we believe renewed FCF (free cash flow) focus coupled with current valuations (Price to Book at historical lows) reflects a positive risk-reward," said CLSA.

Edelweiss expects a sharp improvement in profitability and free cash flows as the external environment gradually improves.

Meanwhile, Credit Suisse said outlook on market shares remains cloudy. It views market shares as the key challenge for JLR given that the capex cuts mean the model cycle is weak and depleted relative to peers.

Kotak Institutional Equities said it sees limited visibility of the company reporting profits anytime soon due to a weak outlook on volumes.