Tata Motors share price tanks 9% after Q4 result 2024. Buy or Not?


Following the announcement of Tata Motors’ Q4 2024 results last Friday, there was significant selling pressure on Monday morning. Tata Motors’ share price opened lower today at ₹1,005 per share on the NSE (National Stock Exchange) and quickly dropped to an intraday low of ₹947.20 per share shortly after the market opened. This decline represented a loss of over 9 percent during Monday’s trading session.

Tata Motors share price tanks 9% after Q4 result 2024
Tata Motors share price tanks 9% after Q4 result 2024

Triggers for Tata Motors share price fall

Chirag Jain, Senior Research Analyst at Emkay Global Financial Services, linked the decline in Tata Motors’ share price to the Q4 2024 results announced last Friday. According to Jain, the Q4 results were underwhelming, showing limited margin expansion across businesses despite increased volumes. The company remains cautiously optimistic about its businesses, anticipating a weaker first half of the year (H1) and expecting resilience in the premium luxury segment amidst broader concerns about emerging demand.

Jain highlighted several factors contributing to a potentially challenging outlook for Tata Motors:

  • Declining order book, normalizing product mix, and higher customer acquisition costs at JLR (Jaguar Land Rover), with normalized free cash flow (FCF) generation expected.
  • A flat growth outlook for the domestic commercial vehicle (CV) sector.
  • Moderating expectations for the Indian passenger vehicle (PV) market, though Tata Motors (TTMT) is anticipated to outperform due to new product launches.

Looking ahead, Jain suggested that Tata Motors’ share price could face further downward pressure, potentially dropping to around ₹950 per share, reflecting ongoing concerns about the company’s performance and market conditions.

Motilal Oswal Remains ‘Neutral’

Motilal Oswal’s report reiterated a ‘neutral’ outlook on Tata Motors’ share price, following the company’s 4QFY24 results. The report noted that the results were operationally in line with their estimates, with an EBITDA margin expanding by 30 basis points quarter-on-quarter to 14.2%. Despite Tata Motors’ strong performance across key segments in FY24, the report highlighted looming headwinds that could impact future performance. Motilal Oswal adjusted their EPS (earnings per share) estimates downward by 3% for FY25 and 5% for FY26.

In terms of valuation, the report mentioned that Tata Motors’ stock trades at 18 times FY25E consolidated EPS and 15.6 times FY26E consolidated EPS, with EV/EBITDA (enterprise value/earnings before interest, taxes, depreciation, and amortization) ratios of 6.2 times for FY25E and 5.3 times for FY26E.

Motilal Oswal’s recommendation remains ‘neutral’ with a target price (TP) of ₹955 based on their FY26E SOTP (sum-of-the-parts) valuation approach, reflecting their cautious stance given the anticipated challenges and valuation metrics.

Tata Motors Q4 results 2024

On May 10, 2024, Tata Motors announced its March quarter financial results. The company reported a remarkable 222% year-on-year increase in net profit, totaling ₹17,407.18 crore. Additionally, Tata Motors saw a notable 13.3% rise in consolidated revenue, amounting to ₹1,19,986.31 crore.

Disclaimer: The opinions and recommendations expressed in this analysis belong to individual analysts or brokerage firms and not Mint. Investors are strongly encouraged to seek advice from certified experts before making investment decisions, as market conditions are subject to rapid change and individual circumstances may vary.



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