International brokerage CLSA, on Tuesday, updated Tata Motors stock to Buy on the back of its belief that healing in Jaguar Land Rovers sales volume, along with improvement in margin profile, will aid the businesss complimentary capital in fiscal year 2023-24 (FY24). It has set a target price of Rs 512 on the scrip, which suggests 24 percent upside from present levels.

Shares of Tata Motors surged 7 percent in Tuesdays intra-day trade before settling at Rs 413 apiece, up 6 percent.

Those of Tata Motors DVR closed 3.65 percent greater. In contrast, the benchmark S&P BSE Sensex fell 1 per cent, while the BSE Auto index edged 0.13 percent greater. CLSAs upgrade comes after Jaguar Land Rover (JLR) reported greater wholesale volumes in the October-December quarter of FY23 (Q3FY23) amidst progressive improvement in chip supplies. Wholesale volumes were 79,591 systems in the period (leaving out the Chery Jaguar Land Rover China joint venture), up 5.7 per cent compared to Q2FY23, and 15 per cent over Q3FY22 sales. Retail sales, nevertheless, fell 3.7 percent QoQ at 84,827 systems in a seasonally strong quarter, which, analysts stated, could be due to high rates of interest across economies. According to the business, retails were greater YoY in North America/UK/Overseas by 26 per cent/14 per cent/12 percent, however decreased 6 per cent/8.5 percent in Europe/China. The business continues to see strong demand for its automobiles.

Since Q3FY23, the overall order book increased to 215,000 client orders, up around 10,000 orders from Q2FY23.

Need for the New Range Rover, New Range Rover Sport and Defender remained strong and represent 74 percent of the order book, Tata Motors said in its statement. ICICI Securities states improvement in wholesale dispatches is a favorable development for the business as it comes during the quarter which saw chip supply restrictions and Covid-led lockdowns in China. The numbers led the brokerages estimate of 88,101 systems.

It anticipates the business to, now, report better operating performance in this incomes season. JLR is experiencing a cyclical recovery, supported by a beneficial item mix.

However, supply-side issues will defer the procedure.

While there will be no near-term catalysts from the JLR organization, the India company will see a continued healing.

The stock trades at 17.1 x FY24E consolidated EPS and 3x P/B.

We keep our Buy ranking with a target of Rs 520, Motilal Oswal Financial Services said in its report. Tata Motors anticipates favorable totally free money flow (FCF) of over ₤ 400 million in the quarter on a preliminary basis.

In December 2022, the company completed a renewal of its undrawn revolving credit center with 23 banks at ₤ 1.45 billion, with the maturity date extended from March 2024 to April 2026. This, experts stated, would be additional assisted by enhanced product mix as share of designs with better revenue margins increased to 65 percent at the end of the quarter vs 45 per cent in H1FY23. JPMorgan, which has neutral rating on the stock and a target of Rs 400, stated JLR requires to achieve a comparable FCF in the January to March quarter to be able to attain its complete year guidance. In the previous 6 months, Tata Motors has actually underperformed the marketplace by falling 6.4 per cent, as compared to the 10.3 per cent rally in the S&P BSE Sensex.

Even more, in the past one year, the stock has slipped 18 percent, as versus a minimal 0.4 percent dip in the benchmark index.

It had actually hit a 52-week high of Rs 528 on January 18, 2022.

Technical ViewBias: Negative Target: Rs 375 Resistance: Rs 415; Rs 421 Assistance: Rs 398 Shares of Tata Motors had actually been trading listed below its 20-DMA (Daily Moving Average) considering that early December.

The stock decreased almost 11 per cent ever since, till January 09. Todays sharp up move has seen the stock bounce back above the 20-DMA.

It is, now, seen screening resistance at its 50-DMA of Rs 415, above which the next hurdle shall be Rs 421 - the 100-DMA. Overall, the bias on the basis of price-to-moving averages stays unfavorable as the shorter-term moving averages are hovering listed below the longer-term moving averages. On the drawback, the stock is most likely to revisit the recent lows of Rs 375-odd level.

In the interim, the 20-DMA at Rs 398 could provide good support.(With inputs from Rex Cano)