India's Tata Motors hits record high on Q1 profit beat, capital reduction plan

BENGALURU, July 26 (Reuters) - Shares of Tata Motors (TAMO.NS) rose as much as 4.1% to a record high on Wednesday after the company reported a better-than-expected first-quarter profit and announced a plan to cancel its A ordinary shares.

The automaker was the second-biggest gainer on the benchmark Nifty 50 (.NSEI) index after engineering firm Larsen & Toubro (LART.NS).

The Mumbai-based company posted a consolidated net profit of 32.03 billion rupees ($391.3 million) for the April-June quarter, compared with a year-ago loss of 50.07 billion rupees.

That beat analysts estimates of a profit of 26.29 billion rupees, per Refinitiv IBES data.

Its UK-based Jaguar Land Rover (JLR) unit, which accounted for 70% of Tata Motors revenue, benefited from strong demand for its higher-margin SUVs like the Range Rover and an improving supply of semiconductors after crippling shortages for several quarters.

JLR logged its highest production levels in nine quarters in April-June, while strong retail sales led to a 66% surge in revenue.

“Strong free cash flow (FCF) generation is expected to support higher investments towards electrification at JLR,\” JM Financial Institutional Securities said in a note.

Kotak Institutional Equities increased its estimates for the companys consolidated earnings before interest, taxes, depreciation, and amortisation (EBITDA) by 12% to factor in the first-quarter performances of JLR and Tata Motors domestic commercial vehicle business.

Separately from the results, Tata Motors said it will cancel its A ordinary shares in a move to simplify its securities structure, sending Tata Motors DVR shares up nearly 17%.