The Indian stock market recovered smartly on May 13 after taking a huge beating the previous day, with the Sensex up 687.28 points, or 1.3 percent, at 53,617.59, and the Nifty jumping 224.40 points, or 1.42 percent, at 16,032.40 in the afternoon trade.
Among sectors, the auto index jumped 4 percent led by Tata Motors, which surged more than 10 percent, a day after it shared its March quarter earnings.
Tata Motors reported a consolidated net loss of Rs 1,032 crore for the quarter ended March, down from a net loss of Rs 7,605 crore in the year-ago quarter.
The company reported an 11.5 percent year-on-year decline in consolidated revenue from operations to Rs 78,439 crore for the reported quarter.
Broking house CLSA has upgraded the rating of Tata Motors to underperform from sell and also raised the target price to Rs 411 from Rs 392 a share.
Its domestic business was strong, while JLR challenges continued and disappointed due to negative surprise on ASP. The volumes, mix and higher realisation led to margin recovery in commercial and passenger vehicles, while strong demand should lead to volume growth.
JP Morgan has an “overweight” rating on the stock and raised the target to Rs 525.
There was a strong FCF recovery and solid guidance for FY23 and it expects the the company to continue on its deleveraging journey.
The company should forecast net automotive debt to decline to Rs 11,800 crore by FY24, CNBC-TV18 reported the brokerage as saying.
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Morgan Stanley also has an “overweight” rating, with the target price at Rs 560. JLR is set to have a weak Q1 but FY23 guidance is a positive surprise.
Unlike the 2018 down cycle, the company is now better placed on JLR, as well as India PVs & CVs. JLR guided facing headwinds, Q1 EBIT margin and FCF may be negative.
The other top performers in the auto index were Bharat Forge and Ashok Leyland, which gained 6 percent each, followed by TVS Motor, Mahindra & Mahindra, Eicher Motors and Hero MotoCorp.
The most active auto stock in terms of volumes were Tata Motors where 4,41,88,732 shares were changing hands at 12.29 pm followed by Ashok Leyland (1,45,86,135).
The recovery in the auto sector was aided by the rise in April auto sales.
Tata Motors’ sales in April jumped by over a two-third from the year-ago period, whereas rivals Hyundai India and Maruti Suzuki faced a decline.
Maruti Suzuki’s April cumulative sales declined 5.7 percent, as the company sold 1.50 lakh units as compared 1.59 lakh cars in the year-ago period.
According to Amit Joshi, Chief Investment Officer at Bajaj Allianz General Insurance, the auto sector is a interest-rate sensitive sector as financing cost plays a critical role in purchasing decision. But overall the demand is more a function of growth and less of interest rates.
The sector is coming out of a down cycle and we are still early in the upcycle, he said.
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