Tata Motors shares hit 52-week high on JLR sales boost

Shares of Tata Motors hit an all-time high in intraday trade on Tuesday after the automaker's luxury arm Jaguar and Land Rover delivered the highest wholesales in 11 quarters during the quarter ended December.

Buoyed by an increase in JLR sales, the Tata Group stock jumped to a 52-week high of ₹809.20 apiece on the National Stock Exchange (NSE). The carmaker's market cap rose to ₹2.66 lakh crore.

Wholesale volumes of JLR rose 27% year-on-year to 101,043 units in the three months to December 31, 2023. This excludes the Chery Jaguar Land Rover China JV. Wholesale volumes for Range Rover Sport were 16,921, up 49%, for Range Rover were 18,843, up 12% and for Defender were 27,117, up 14% (compared to the quarter ended 31 December 2022). Wholesale volumes for the financial year to date were 291,113, up 28% compared to the prior year.

Retail sales for the third quarter were 109,140 units (including the Chery Jaguar Land Rover China JV), up 29% compared to the same quarter a year ago and up 2% compared to the quarter ended 30 September 2023. Retail volumes were higher in all regions year-on-year: UK up 55%, Overseas up 49%, China up 28%, Europe up 27% and North America up 6%.

The luxury carmaker’s order book reduced from 168,000 at the end of the second quarter to 148,000 in Q3, reflecting increased order fulfilment to customers and resulting in improved client waiting times for its most profitable models.

Demand for profitable SUVs such as Range Rover, Range Rover Sport and Defender remains strong, representing 76% of the order book.

Last year, Tata Motors raised JLR's margin guidance from 6% to 8% for FY24. The luxury carmaker is targeting a 10% EBIT margin by FY26.

JLR's net debt came down to 2.2 billion pounds in the 12 months to September 2023. The British carmaker plans to slash its net debt to less than 1 billion pounds by the end of FY24 and become net cash positive by FY25.

In FY23, Tata Motors-owned JLR halved its break-even volume threshold to 300,000 units from 600,000 in FY19 by focussing on high-margin SUVs.

To catch up with its peers, JLR is spending £15 billion over the next five years to transition to EVs. The luxury carmaker plans to launch six Land Rover BEVs by 2026. The Jaguar brand will become all-electric by 2025 with prices starting from £100,000.

Basudeb Banerjee, analyst at ICICI Securities, expects JLR will be a steady ship going forward. "It won't grow massively, but it will be steady, unless some major geopolitical issue comes and impacts," Banerjee told Fortune India.