Tata Motors’ shares soared by up to 4.1% on Wednesday, reaching a record high following the company’s impressive first-quarter profit announcement and a decision to cancel its ‘A’ ordinary shares.
For the Q1FY24, the auto giant reported a consolidated net profit of Rs.32.03 billion ($391.3 million), a significant improvement from the loss of Rs.50.07 billion recorded in the same period the previous year. This surpassed analysts’ expectations of a profit of Rs.26.29 billion.
The company’s UK-based unit, Jaguar Land Rover (JLR), which accounts for 70% of Tata Motors’ revenue, experienced a boost in performance. The strong demand for its higher-margin SUVs like the Range Rover and improved semiconductor supply after facing crippling shortages for several quarters contributed to JLR’s success. During April-June, JLR achieved its highest production levels in nine quarters, and robust retail sales led to a remarkable 66% surge in revenue.
Experts observed that this success is expected to result in strong free cash flow (FCF) generation, which will support higher investments in JLR’s electrification efforts.
Experts also started revising its estimates for Tata Motors’ consolidated EBITDA by 12%, factoring in the impressive first-quarter performances of both JLR and Tata Motors’ domestic commercial vehicle business.
Aside from the financial results, Tata Motors also revealed its plan to simplify its securities structure by canceling its ‘A’ ordinary shares. This move had a positive impact on Tata Motors DVR shares, causing them to rise by nearly 17%.
Tata Motors’ shares had a impressive rally with 44% gains in the last 12 months.