Tata Motors drives past Maruti as most-valued auto firm

Tata Motors surpassed Maruti Suzuki (India) (MSIL) to become the most-valuable automobile company, in terms of market capitalisation (mcap), after a gap of seven years.

With this, the company’s sto­ck hit a new high on the BSE on Tuesday (January 30).

The combined mcap of Tata Motors (Rs 285.51 crore) and Tata Motors DVR (Rs 29,119 crore) stood at Rs 3.146 trillion.

In comparison, the market cap of India’s largest passenger vehicle company, MSIL, sto­od at Rs 3.13 trillion, the BSE data shows

Back in 2017 (January 25), Tata Motors had pipped MSIL with an mcap of Rs 1.76 trillion against the latter’s Rs 1.75 trillion, according to Capitaline data.

Shares of Tata Motors (up 2.19 per cent at Rs 859.25) and Tata Motors DVR (up 1.63 per cent at Rs 572.65) hit record highs on Tuesday.

MSIL, on the other hand, was down 0.36 per cent at Rs 9,957.25.

In comparison, the BSE Sensex ended 1.11 per cent lower at 71,139.90.

In the past one year, the stock price of Tata Motors has zoomed 91 per cent compared to a 12 per cent rise in MSIL’s share.

In comparison, the Sensex rallied 19.5 per cent during the period.

The buoyant performance of Tata Motors at the stock market is on the back of healthy volumes in its UK-based subsidiary Jaguar Land Rover (JLR).

This, coupled with gradual recovery in global passenger vehicle (PV) demand, improving profitability due to product mix and lower commodity costs, are expected to be key positives for the company, according to analysts.

The order book continues to reflect strong demand for JLR products with 148,000 client orders at the end of the December quarter (Q3FY24).

This has reduced from 168,000 at the end of the September quarter (Q2FY24), reflecting increased order fulfillment to clients.

It is resulting in improved client waiting times for the company’s highly-desirable vehicles.

Demand for Range Rover, Range Rover Sport and Defender remains particularly strong, representing 76 per cent of the order book, Tata Motors said.

Going forward, the management expects demand to improve in the March quarter (Q4FY24) across most segments of the commercial vehicle (CV) industry.

This is due to the government's continuing thrust on infrastructure development, promising growth outlook of the economy, and the company's demand-pull initiatives.

Brokerage firm Motilal Oswal Financial Services believes that while JLR will continue to see a healthy recovery, growth will moderate in Tata Motors’ PV and CV businesses in the coming years.

This is due to normal base and slowdown in the lower-end PVs and LCVs.

The growth in JLR is likely to be supported by gradual recovery in global PV demand, a strong order book, and a favourable product mix, it added.

The brokerage firm has a 'buy' rating on Tata Motors’ with a target price of Rs 900 per share.

Meanwhile, Tata Motors is scheduled to announce its Q3FY24 earnings on February 2, 2024.

KR Choksey Shares and Securities expects consolidated earnings before interest, taxes, depreciation, and amortisation (Ebitda) margin to expand by
250 basis points (bps) Y-o-Y/ 34 bps quarter-on-quarter (Q-o-Q).

JLR margins are also expected to improve Q-o-Q due to operating leverage and a favourable product mix, partially offset by higher marketing spending.

“We expect CV Ebitda margin to see 20 bps Q-o-Q moderation due to negative operating leverage.

"Tata Motors’ PV will see margin improvement Q-o-Q due to new launches and improvement in EV margins.

"We expect the net profit to grow by 50.3 per cent Y-o-Y/18.1 per cent Q-o-Q,” the brokerage firm said in its results preview report.