Why did Tata Motors plummet over 9% despite robust Q4 results?

The company received mixed response from brokerages

Tata Motors Representational image | Shutterstock

The shares of Tata Motors plummeted more than 9 per cent on Monday despite strong results recorded in the March quarter, wiping out the auto major's market valuation by Rs 29,946.88 crore. 

Opening at Rs 1,005 per share on the National Stock Exchange, the stock went as low as Rs 947.2 per share, making it the top laggard on both benchmark indices.

Tata Motors saw a three-fold jump in consolidated net profit at Rs 17,528.59 crore in the quarter ending March 2024 after all its three auto businesses delivered a strong performance, according to a regulatory filing.

The company had posted a consolidated net profit of Rs 5,496.04 crore in the same quarter of the previous fiscal, rising 222 per cent YoY growth in its consolidated net profit.

Total consolidated revenue from operations stood at Rs 1,19,986.31 crore compared to Rs 1,05,932.35 crore in the year-ago period.

However, many point out that though the figures are impressive, the revenue and Ebitda numbers lack the lustre, hinting at a weak start in the new financial year. The low Ebidta figures are attributed to weak CV performance despite the other two segments -- Domestic PV and JLR -- meeting the expectations.

Chirag Jain, Senior Research Analyst at Emkay Global Financial Services told Live Mint that the Q4 results 2024 were muted with limited margin expansion across businesses despite higher volumes. "Company remains cautiously optimistic across businesses, with H1 expected to be weaker and the premium luxury segment seen as resilient amid overall emerging demand concerns," he added.

Some brokerages like JPMorgan gave an 'overweight' rating to the stock and raised the target price to Rs 1,115, while Jefferies issued a "buy" call and increased the target price tp Rs 1,250 apiece.

Motilal Oswal also maintained a "neutral" rating on Tata Motors while Nomura brought down the rating of the stock to 'neutral' from 'buy'. However, Morgan Stanley downgraded the stock to equal-weight from overweight.

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