1:2 Split By Tata Group; Tata's 79-Year-Old Auto Stock Gains On Strong JLR Sales; Fundamental Analysis

Tata Motors' share price is seeing buying trend in the opening bell for Tuesday's trade session. In the early trade, Tata Motors' share price rallied by 1.6% to Rs 1029.60 apiece, near its all-time high of Rs 1,065.60 apiece. Its market cap rose to nearly Rs 3.42 lakh crore.

The reason for the buying trend could be attributed to strong sales by its luxury car brand Jaguar Land Rover (JLR) for Q4 and full-year FY24. Also, the 79-year-old auto giant of Tata Group is on the path of demerger. The development will lead to a split of Tata Motors into two listed companies, hence a 1:2 ratio.

In its regulatory filing, Tata Motors revealed that JLR reported its full-year sales are up over 20 per cent year-on-year reflecting improved production and sustained global demand.

JLR's Q4 Sales:

According to the filing, the luxury car's wholesale volumes stood at 110,190 units in the fourth quarter (excluding the Chery Jaguar LandRover China JV) were up16% compared to the same quarter a year ago and up 9% compared to the quarter ended 31 December 2023. By brand, compared

to the prior year, wholesale volumes increased in the quarter for Range Rover (up 22% to 58,280 units), Defender (up 5% to 28,702 units), Jaguar (up 39% to 13,528 units) and Discovery (up 1% to 9,680 units).

Further, its retail sales for the fourth quarter were 114,038 units (including the Chery Jaguar Land Rover China JV), up 11% compared to the same quarter a year ago and up 4% compared to the quarter ended 31 December 2023. Compared to the prior year, retail sales in the quarter were up 32% in the UK, 21% in North America, and 16% Overseas. Compared to the prior year, retail sales in China weredown9% and down 2% in Europe for the quarter.

JLR FY24 Sales:

In FY24, the luxury car brand stated that its % and 22% respectively compared to the prior year; wholesale volumes and retail sales were up in all regions compared to the prior year.

JLR will report results for the fourth quarter and full financial year ending 31st March 2024 in May 2024.

The progress on Tata Motors' demerger plan ahead alongside Q4 results for FY24 will most likely swirl sentiments in Tata Motors' share price. The company's stock is soon going to be split into a 1:2 ratio. The auto giant will be demerged into two separate listed companies housing A) the Commercial Vehicles business and its related investments in one entity and B) the Passenger Vehicles businesses including PV, EV, JLR and its related investments in another entity.

Tata Motors Share Price Fundamental Analysis:

As per Trendlyne data, the consensus recommendation from 29 analysts for Tata Motors Ltd. is BUY. Also, EPS is expected to grow by 1670.6% in FY24. Further, the data highlighted key fundamentals that will influence sentiments in Tata Motors, they are:

- Stock Price rose 131.51% and outperformed its sector by 50.09% in the past year.

- Debt to Equity Ratio of 2.77 is higher than 1. This implies that company assets are financed through debt.

- Price to Earning Ratio is 17.36, lower than its sector PE ratio of 33.82.

- Return on Equity(ROE) for the last financial year was 5.32%, less than 10%, indicating an inefficient use of shareholder's capital to generate profit.

- Promoter Share Holding decreased by 0.01% in the most recent quarter to 46.37%.

- Promoter Pledges are zero.

- Interest Coverage Ratio is 3.57, higher than 1.5. This means that it can meet its interest payments comfortably with its earnings (EBIT).

- Mutual Fund Holding increased by 0.55% in the last quarter to 10.37.

Disclaimer: The write-up highlights is just for information purposes, and is not a recommendation to buy, sell or hold. We have not done fundamental or technical analysis and have no opinion on the stock mentioned. Neither, the author nor Greynium Information Technologies should be held liable for any losses. Please consult a professional advisor.