Tata Motors has seen strong success in all three of its businesses : Commercial Vehicles (CV), Passenger Vehicles (PV+EV), and Jaguar Land Rover (JLR).
Finance Navigatorr Desk: The goal of Tata Motors’ announced demerger of its passenger and commercial vehicle businesses into two separate listed organizations is to improve the company’s capacity to take advantage of growth prospects. The Commercial Vehicles business and its related investments will be included in the first entity, while the Passenger Vehicles segment, which includes PV, EV, JLR, and their related investments, will be included in the second.
Because each strategy has been implemented well, Tata Motors has seen strong success in all three of its businesses:
Commercial Vehicles (CV), Passenger Vehicles (PV+EV), and Jaguar Land Rover (JLR).
Over the last year, the firm has produced strong multi-bagger returns, mostly due to notable advancements in its commercial vehicle sector and Jaguar and Land Rover divisions. The firm saw a notable increase in its stock price when, in Q3FY23, it turned a profit after seven consecutive quarters of losses. This trend was continued in the following quarters. The stock has increased by more than 7% so far in March, continuing its upward trend for the sixth consecutive month since November 2023.
Tata Motors to demerge its businesses into two separate listed companies passenger vehicle and commercial vehicle
Due to robust sales at its British luxury vehicle division, Jaguar Land Rover (JLR), Tata Motors announced a more than two-fold rise in net profit for the quarter that ended in December 2023, above Street predictions. In Q3FY24, Tata Motors’ consolidated net profit increased by 137.5 percent to ₹7,025.11 crore from ₹2,958 crore in the same period the previous year.
In terms of operations, the car major’s profits before interest, taxes, depreciation, and amortization (EBITDA) increased by 59% to ₹15,333 crore in the December quarter compared to ₹9,644 crore in the same time last year. Tata Motors saw a 9% increase in overall domestic sales last month, totaling 84,834 units, and an 8.4% increase in wholesale sales, reaching 86,406 units.
With a new high of ₹1,065.60, Tata Motors has now had five months in a positive area. In line with the positive Nifty Auto Index, the stock is supported by the ₹940-950 levels and is still above the 20-day and 50-day moving averages. Delivery volume above the 5-day average by 259.07%. Stable investors often win the race, but following a rapid advance, the stock may see consolidation.
Tata Motors has risen more than 50% in the previous three months, continuing its robust ascent. With a bearish divergence in the momentum indicator and a high wave
candlestick pattern at the crest, the stock is now exhibiting symptoms of waning upward momentum. Instead of opening new long positions at these points, traders should hold off and wait for a decline into the 980-960 region. However, in the near term, it is anticipated that the 1040–1060 will serve as a strong resistance zone.
At now, the stock is in a traditional uptrend and is nearing its high. The weekly chart shows a breakout from a flag formation, and the substantial volume indicates a great possibility for more increases. The overall prognosis is positive due to its trading position above significant moving averages and a demand zone around 890–900.
Tata Motors’ decision to go forward with the demerger is indicative of the company’s management’s faith in the PV and JLR business divisions’ strong comeback. TTMT’s strategic demerger is expected to have a substantial impact on the company’s market positioning and operational emphasis. The firm takes into account the interests of all parties involved in the demerger process, including consumers, workers, and shareholders.
The stock’s maintained target price of INR 1,000 per share has been reduced from BUY to Neutral. With a 204% return over the previous 36 months compared to the Nifty’s 50% return, the stock has beaten important benchmarks by a wide margin.