At 1:30 PM on Thursday, Tata Motors’ stock was down 6.8% at Rs 701.40 on the BSE, a modest recovery from the day’s low of Rs 684.25. The company’s earnings missed projections of Rs 6,791 crore, falling 22% year over year to Rs 5,451 crore. Revenue, however, increased 3% year over year to Rs 1.13 lakh crore.
Tata motors share price Under Pressure After Q3 Loss & Forecast Cut
After the release of a weaker-than-expected Q3 performance and poor FY25 projection for Jaguar-Land Rover (JLR), Tata Motors’ shares were under a lot of pressure during the Thursday, January 30 trading session.
After a little recovery from the day’s low of Rs 684.25, Tata Motors’ shares were trading 6.8% down at Rs 701.40 on the BSE at 1:30 pm on Thursday.
The company’s earnings below street projections, falling 22% year over year to Rs 5,451 crore. The earnings fell well short of the Rs 6,791 crore ET Now poll forecast. Nonetheless, operating income increased 3% year over year to Rs 1.13 lakh billion.
Additionally, the business lowered its FY25 sales goal from GBP 30 billion to GBP 29 billion for JLR, and ROCE is now anticipated at 20% instead of 22%.
The business has kept its free cash flow (FCF) goal of GBP 1.3 billion and its EBIT margin objective over 8.5%.
Brokerages have differing views on the stock in the wake of these events. What they say is as follows:
Jefferies: Poor performance | Price target: Rs 660
Jefferies has reduced its target price for Tata Motors from Rs 930 to Rs 660 and downgraded it from a “Buy” to a “Underperform.”
After three and a half years, Jefferies has downgraded the shares for the first time. The change coincides with growing customer acquisition costs, increased warranty charges, and sluggish JLR demand in China and Europe. The need for PV and CV has decreased in India as EV competition has grown. However, a stronger season is anticipated in Q4 of FY25. Additionally, Jefferies reduced EPS by 5–10% and FY25–27E EBITDA by 7–11%.
Nuvama: Cut | Price target: Rs 720
In order to keep its’reduce’ rating on Tata Motors, Nuvama has lowered the target price from Rs 750 to Rs 720.
Due to realization and margin shortfalls in JLR and the India CV segment, Q3 FY25 EBITDA was below projections. With a modest 2% CAGR anticipated for sales and EBITDA during FY25-27E, management has reduced FY25E JLR revenue by 3%.
Due to sluggish regional demand, order book fatigue, and the withdrawal of the Jaguar model, JLR volumes are expected to decline at a -4% CAGR. In the meanwhile, limited road building investment and a large base are likely to limit the 1% CAGR increase in India’s CV segment.
Kotak Equities: Increase | Aim for Rs 825
At a target price of Rs 825, Kotak Institutional Equities maintained its ‘add’ rating on the company.
Due in part to better-than-expected growth in the domestic PV sector and in part to poor performance in the JLR and CV divisions, Tata Motors’ consolidated EBITDA was 9% below projections.
Even while JLR’s EBIT margin was higher than anticipated, its free cash flow (FCF) generation was still below forecasts. Demand patterns are anticipated to progressively improve across all three business areas, notwithstanding the persistence of short-term difficulties.
Elara Capital: Purchase | Price target: Rs 909
Reiterating its ‘buy’ recommendation for Tata Motors, Elara Capital set a target price of Rs 909.
As anticipated, ASP in Q3 was influenced by a reduced China contribution and a higher VME (the ASP of China imports is 50% more than the company average). But because to its specialist portfolio approach, JLR has succeeded and is predicted to keep surpassing the expansion of the Chinese ICE market through CY25–26. Cost-cutting initiatives and a 90bps PLI advantage helped the EBITDA margin increase by 124bps YoY to 12.4% in Q3, despite reduced dispatches in the CV sector.
Additionally, the PV EBITDA margin improved 118 basis points year over year to 7.8%. However, the underlying margin of 6.3% was consistent when the 150bps PLI gain in Q3 was taken into account.
