Big Bull Portfolio: What should investors do with Tata Motors shares post Q4 results? 

Shares of Tata Motors Limited, a part of Big Bull Rakesh Jhunjhunwala's portfolio, zoomed over 10 per cent to hit an intraday high of Rs 415.75 after the company posted better than expected results for the quarter ended March 2022. 

The stock opened higher at Rs 386.30 against the previous close of Rs 372.10. With a market capitalisation of more than Rs 1,36,000 crore, the shares stand higher than 5-day moving averages but lower than 20-day, 50-day, 100-day, and 200-day moving averages. 

The company reported a narrowing of net loss to Rs 1,032.84 crore for the quarter ending 31 March, 2022. The firm had posted a net loss of Rs 7,605.40 crore a year earlier. 

Sequentially, the automaker's loss narrowed from Rs 1,516.14 crore in the December quarter (Q3FY22). 

Tata Motors' consolidated total revenue from operations declined nearly 11.4 per cent to Rs 78,439.06 crore versus Rs 88,627.90 crore from a year ago. 

ICICI Securities said that Tata Motors’ (TTMT) operational performance was marginally ahead of the estimates with EBITDA margin for CV, India PV, and JLR combined being 100 bps higher than expected. 

"With the order book at 168k units and low channel inventory in the system, we expect the mix to normalise resulting in mean reversion of realisation and gross margin as production improves," it said. 

The brokerage firm has maintained a 'Buy' rating with a revised target price of Rs 677 (earlier: Rs703), implying 2.2x/13x JLR/standalone FY24E EV/EBITDA. 

"Tata Motors continues to remain our top pick, given its improving India franchise, early leadership in EVs in India, and JLR’s aggressive cost controls. Standalone business is in sweet spot led by healthy cyclical recovery both in PV and CV whereas favorable product cycle to help drive JLR outperformance," Yes Securities noted. 

"The recent valuations contraction makes Tata Motors an even more attractive play among OEMs. We cut FY23/24 EPS by ~9 per cent each to factor in recent global headwinds and estimate a revenue/EBITDA CAGR of 14 per cent/29 per cent in FY22-24E. We maintain BUY with a target price of Rs 520 (v/s Rs565 earlier)," it added. 

According to HDFC Securities, Tata Motor’s Q4 performance was a mixed bag with India PV business posting impressive performance while the same for JLR and India CV remained lackluster. 

The brokerage firm sees near-term incremental margin pressures for JLR, given the China slowdown and unabated supply constraints.  

"As a result, we have lowered our estimates by 9 per cent each for FY23/24E. It has maintained Reduce with a revised target price of Rs 398 per share (from Rs 441 per share)," it added. 

As per the shareholding pattern, Jhunjhunwala owns 1.12 per cent stake in the company as of March 2022.