The shares of the leading automaker under the Tata Group fell 9 percent after a few brokerage firms downgraded the stock, despite the fact that the company’s net profit and sales climbed by 218 percent and 13 percent year on year, respectively, in the fourth quarter.
With a market capitalization of Rs 3.17 lakh crore, the shares of Tata Motors Ltd were trading at Rs 958.80 per share, decreasing around 8.41 percent as compared to the previous closing price of Rs 1,046.85 apiece.
Looking into the company’s performance, Tata Motors Ltd’s revenue increased by 9 percent on a quarter-on-quarter basis from Rs. 1,10,577 crore in Q3FY24 to Rs. 1,19,986 crore in Q4FY24. Further, revenue increased by 13 percent year on year, from Rs. 1,05,932 crore in Q4FY23 to Rs. 1,19,986 crore in Q4FY24.
Tata Motors Ltd’s net profit increased by 145 percent on a quarter-on-quarter basis, from Rs. 7,145 crore in Q3FY24 to Rs. 17,529 crore in Q4FY24. Further, net profit increased by 218 percent year on year from Rs. 5,496 crore in Q4FY23 to Rs. 17,529 crore in Q4FY24.
According to a few reports, three major global brokerages, Goldman Sachs, Morgan Stanley, and Nomura, downgraded the stock, while Citi suspended its rating on Tata Motors due to a negative forecast for FY25.
Nomura downgraded Tata Motors to neutral from buy, citing demand uncertainties and a slowing in commercial vehicle growth. Similarly, Morgan Stanley reduced Tata Motors to equal weight from overweight and said that a quick EV pickup-led recovery in FY25 would be a significant upside risk to monitor.
Motilal Oswal reduced EPS estimates for FY25/FY26 by 3%/5%, stating that the Tata company is facing clear headwinds ahead that are likely to hurt its performance in FY25, and that JLR margins will remain stable over FY24-26, despite rising cost pressure as it invests in demand generation, normalizing mix, and EV ramp up, which is likely to be margin dilutive. Even in India, demand for Commercial vehicles (CV) and passenger vehicles (PV) is moderating.
Tata Motors Limited is a multinational vehicle manufacturer. The company’s diversified portfolio includes automobiles, SUVs, trucks, buses, and defense vehicles. Its business categories include automotive and other activities.
Written by:- Abhishek Singh
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