Tata Motors’ robust performance in Q4 FY24, with its net profit more than tripling year-on-year, received a mixed reception from investors. Despite the impressive growth, the stock fell nearly 6 percent at the opening on May 13, trading at Rs 985.
The company reported a remarkable 222 percent year-on-year growth in its consolidated net profit, reaching Rs 17,407 crore. This surge was attributed to improved operating leverage, favorable commodity prices, and strong volume growth across various segments. Additionally, its revenue from operations increased by 13 percent to Rs 1.2 lakh crore.
Several brokerages issued varying calls on the stock:
- JPMorgan maintained an ‘overweight’ rating, raising the target price to Rs 1,115, citing strong free cash flow (FCF) in Q4, particularly noteworthy in Jaguar Land Rover (JLR). Management’s commitment to achieving a net cash-positive position by FY25 was highlighted.
- Jefferies issued a ‘buy’ call with a raised target price of Rs 1,250, emphasizing Tata Motors’ reduced automotive debt and positive outlook, despite concerns about demand in India.
- Nomura downgraded the stock to ‘neutral’ from buy, citing potential demand risks for JLR and moderating growth in the passenger vehicle (PV) segment.
- Morgan Stanley downgraded the stock to equal-weight, suggesting limited upside potential despite a strong performance.
- Motilal Oswal reiterated a neutral stance, cautioning about margin dilution due to JLR’s EV ramp-up and moderating demand in both the CV and PV segments in India.
Despite concerns about overall passenger vehicle demand, Tata Motors remains optimistic about the premium luxury segment’s resilience. While facing headwinds, the company’s wholly-owned subsidiary, Jaguar Land Rover, continued to perform strongly, reflecting an 11 percent revenue increase compared to the same quarter last year.
Tata Motors, which was the best performer on the Nifty in 2023, has faced divergent market reactions to its latest earnings report.
Disclaimer: The opinions and investment suggestions expressed by experts on LegalParivar.com are their own and not endorsed by the website or its management. It is advised to consult certified experts before making any investment decisions.
