Tata Motors Share Price Drop by 9% after Q4 2024 Results; Know more

Tata Motors shares plummeted by 8.28%, reaching an intraday low of ₹960.10 per share. The decline occurred after the company reported a subdued outlook despite posting strong quarterly results. The stock suffered the most significant loss on both the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE). The sharp sell-off was attributed to Tata Motors missing Q4 estimates and providing a weak outlook for Jaguar Land Rover (JLR).

In the March quarter, Tata Motors' earnings did not impress investors, causing the stock to drop 9.44% to ₹948 per share on the BSE and 9.50% to ₹947.20 on the NSE. The company's market capitalization (mcap) saw a decrease of ₹29,946.88 crore, resulting in a total of ₹3,17,998.73 crore. Tata Motors was the top underperformer among BSE Sensex and NSE Nifty companies, significantly contributing to the 3% decline in the Nifty Auto Index. 

The Tata Group's automotive division experienced a remarkable 222% annual increase in consolidated net profit, reaching ₹17,407 crore. This growth was driven by enhanced operational efficiency, favorable commodity pricing, and significant volume expansion across multiple segments. The company's operating revenue surged by 13% to ₹1.2 lakh crore.

Despite the seemingly impressive numbers, Tata Motors' Q4 results fell short of analysts' expectations in terms of revenue and earnings before interest, taxes, depreciation, and amortization (EBITDA). Market observers anticipate a slowdown in growth for Tata Motors' businesses in fiscal year 2025 due to a high base effect. The company maintains a cautious outlook, predicting a weaker first half of fiscal year 2025 amidst concerns over demand.

Tata Motors' consolidated Ebitda underperformed expectations due to sluggish domestic CV business performance. The Ebitda of JLR and domestic PV businesses generally met Kotak Institutional Equities' forecasts. Tata Motors generated ₹26,900 crore in FCF in FY24, significantly reducing consolidated net debt and maintaining its trajectory to achieve net cash status by FY25E.

"Overall, we expect the FY2025-26E performance to remain healthy, led by steady JLR business performance, driven by an improvement in mix and cost control measures, market share gain in the PV and CV segments and net cash balance sheet by FY25E," Kotak added with an 'Add' rating with a fair value of ₹1,100.

Tata Motors' Q4FY24 results aligned with operational estimates, with an Ebitda margin expansion of 30bp QoQ to 14.2%. While Tata Motors' FY24 performance across its key segments was strong, Motilal Oswal Financial Services anticipates headwinds that could hinder future growth.

"We had recently downgraded to 'Neutral' on the back of JLR margins are unlikely to improve given anticipated rising cost pressures and normalizing mix, and a weak outlook for India business. These factors are now playing out in line with our expectation., it added with a revised target price of ₹970 on the stock," with the same rating.

After reviewing Tata Motors' Q4 performance, Emkay Global maintained its 'Reduce' recommendation, with a target price of ₹950 per share remaining unchanged. Emkay Global noted that Tata Motors' Q4 earnings were subdued, with minimal margin improvement across business segments despite increased volumes. While Tata Motors made progress in debt reduction, Emkay Global anticipates challenges for all business units due to a shrinking orderbook, a return to a typical product mix, a stagnant growth forecast for the domestic commercial vehicle market, and a softening outlook for the Indian passenger vehicle market.

JPMorgan has an 'Overweight' rating on the stock, increasing the target price to ₹1,115. Jefferies has issued a 'Buy' recommendation with a raised target price of ₹1,250 per share. Conversely, Morgan Stanley has downgraded the stock to 'Equal-weight' with a target price of ₹1,100.