India’s Tata Motors up 8.2% after posting shock Q4 profit

SHARES of Tata Motors rose as much as 8.2 per cent to a four-month high on Friday (Jan 27), after the group reported its first quarterly profit in two years.

India’s third-largest carmaker by volume posted its biggest intraday jump in over eight months, before easing to trade up about 5.2 per cent at 440 rupees as at 12.45 pm local time (3.15 pm Singapore time). The stock was among the top gainers on the benchmark Nifty 50 index, which was down 1.8 per cent on the day.

Tata swung to a profit of 29.6 billion rupees (S$476.6 million) in the fourth quarter of 2022, bucking analysts’ expectations of a 185.6 million loss. The carmaker’s surprise profit also reversed a loss of 15.2 billion rupees the year before.

Improving semiconductor supplies and rising demand helped Tata’s luxury car unit, Jaguar Land Rover (JLR), turn profitable. JLR contributed more than 60 per cent of the group’s overall revenue.

Goldman Sachs said the supply of chips was allotted to the Range Rover and Defender sports utility vehicles (SUVs), which had a higher average selling price. Those were also the most profitable models at JLR, helping it to rake in free cash flow of £490 million (S$797.1 million).

Goldman said it expected JLR’s volumes to gradually improve to between 30,000 and 35,000 per month, up from 27,000 currently, as supplies improved. The bank rated Tata’s stock “neutral”.

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Nomura said JLR also benefited from a demand rebound in China – a key market for the Tata unit. It rated the group’s stock “buy”, which was also the average rating of 30 analysts covering the stock, according to Refinitiv data.

Separately, Bajaj Auto, one of India’s top makers of motorcycles and three-wheelers, also reported a bigger-than-expected quarterly profit, due to strong domestic demand and higher prices. REUTERS