Tata Motors stock in focus as JLR posts strong Q2 volumes; stock price target at Rs 786

Morgan Stanley, meanwhile, has an 'Overweight' rating on the counter, with a target of Rs 711 per share. "A strong mix should support Q2 margins, and forms upside risk to FY24 EBIT margin estimate of 6.6%," the brokerage said.

Morgan Stanley also said that Tata should be a de-leveraging play in the current financial year and India EV play in FY25.

The UK-based luxury subsidiary of Tata Motors reported an increase in sales volumes for the second quarter of the current fiscal. Wholesale volumes were at 96,817 cars (excluding the Chery Jaguar Land Rover China JV), up 29% from the year-ago quarter, and 4% higher from the April-June period, notwithstanding the annual two-week summer plant shutdown. Wholesale volumes for the first half of the fiscal were 190,070, up 29% from the year-ago period.

Retail sales in the reported quarter came in at 106,561 units (including the Chery Jaguar Land Rover-China Joint Venture), up 21September from the same quarter of the previous year ago.

Retail volumes were higher in all regions year-on-year: Overseas up 56%, North America up 32%, Europe up 16%, the UK up 9% and China up 7%.

JLR's order book remains strong at 1.68 lakh units at the end of the September quarter. Demand for the Range Rover, Range Rover Sport and Defender models remained strong, accounting for 77% of the order book.

Based on preliminary cash balances, JLR also expects positive free cash flow of around £300 million in the second quarter of this fiscal.

A breakup between Jaguar and LR wholesale was not shared by the company. However, higher-than-expected wholesales despite an annual two-week summer shutdown indicate that supply-side constraints continue to ease.