Tata Group stocks, including Voltas, Tata Power, and Tata Motors, have encountered significant selling pressure lately, leading to a sharp decline in share prices. This sell-off followed the release of their financial results for the March quarter and full-year FY24.
Analysts anticipate further selling pressure on these stocks in the short term. In the previous trading session, Tata Motors witnessed a notable intraday drop of 9.4% before closing with an 8.30% decline, marking its largest single-day decrease in two years.
Over the past six trading sessions, Tata Motors saw a 6.70% decline in its share price, resulting in a market value loss of ₹22,592.60 crore. Similarly, Tata Power experienced a 9.4% decrease, leading to a reduction of ₹14,731 crore in market capitalization. Additionally, Voltas observed a 12.8% decline, translating to a market capitalization reduction of ₹5,985.83 crore. Collectively, these stocks suffered a total market capitalization loss of ₹43,310 crore.
Tata Motors reported a robust financial performance in FY24, but its cautious sales outlook for the current fiscal year within its Jaguar Land Rover division prompted analysts to downgrade the stock, contributing to the decline in its value. Jaguar Land Rover (JLR) announced that it expects margins on earnings before interest and taxes (EBIT) for fiscal 2025 to be similar to the previous year’s 8.5%. This cautious outlook, coupled with a decrease in the order book for Jaguar, led to downgrades from global brokerage firms such as Goldman Sachs Group and Morgan Stanley.
Goldman Sachs downgraded its rating from ‘buy’ to ‘neutral’ and revised its 12-month price target down to ₹1,040 per share from ₹1,080. Similarly, Morgan Stanley adjusted its rating from ‘overweight’ to ‘equal weight.’ Domestic brokerage firm Motilal Oswal also revised its earnings per share (EPS) estimates downward for FY25 and FY26 by 3% and 5%, respectively. They maintained a ‘Neutral’ rating on the stock while lowering the target price to ₹955 per share.
In CY23, Tata Motors shares delivered a multibagger return of 101%, making it the only Nifty 50 stock to achieve this feat. This remarkable performance followed a turnaround at JLR, the company’s British luxury unit, which helped Tata Motors return to profit in Q3 FY24.
Earlier in March, Tata Motors approved a demerger plan, dividing the company into two separate listed entities. One entity will focus on the Commercial Vehicles business, while the other will house the Passenger Vehicles segment, including PV, EV, JLR, and related investments.
Disclaimer: The views and recommendations expressed in this article are those of individual analysts and do not represent the views of LegalParivar.com. Investors are advised to consult certified experts before making investment decisions.
