Tata Motors’ shares dropped nearly 5% to ₹1,090 each after the company released its June quarter earnings report. Despite strong numbers, profit booking led to selling pressure.
Key Points:
- Earnings Report: Tata Motors reported a 74% increase in consolidated net profit to ₹5,566 crore for the June 2024 quarter. Total income rose to ₹1,09,623 crore from ₹1,03,597 crore in the same period last year.
- Jaguar Land Rover (JLR): JLR achieved its best first-quarter revenue of 7.3 billion pounds, up 5% from last year. However, production may be constrained in Q2 and Q3 due to summer plant shutdowns and supply chain issues caused by floods at a key aluminum supplier.
- Domestic Market: Commercial vehicle sales increased by 7% to 87,615 units, while passenger vehicle sales declined by 1.1%. Demand is expected to improve due to investments in infrastructure, favorable monsoons, positive economic conditions, and festive demand.
- Future Outlook: Tata Motors remains cautiously optimistic, maintaining its full-year financial goals of achieving >8.5% EBIT and net cash. The launch of Curvv, India’s first SUV Coupe, and the festive season are expected to boost sales.
- Corporate Restructuring: The company’s board approved a merger scheme to separate Tata Motors into two listed companies, with TML demerging its commercial vehicle operations into TMLCV.
Should You Buy, Sell, or Hold?
Considering the positive outlook but potential short-term production constraints, investors may want to carefully evaluate their risk tolerance and investment goals. Analysts have mixed views, so it’s essential to stay informed and consider the broader market conditions.
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