#NSE0037– Tata Motors seems to have had a remarkable performance in the March 2024 quarter, with its consolidated net profit surging over three-fold compared to the same period last year. The total consolidated revenue from operations also saw significant growth, indicating a strong performance across its various business segments.
The standout performer appears to be its British arm, Jaguar Land Rover (JLR), which reported another record-breaking quarter with impressive revenue and profit figures. JLR’s revenue growth and improved profitability seem to have positively impacted Tata Motors’ overall financial performance.
The company’s board has recommended a final dividend along with a special dividend, subject to shareholder approval, which indicates confidence in its financial position and future prospects.
Tata Motors’ Q4 FY24 results indeed showcased a significant improvement, with its net profit more than tripling year-on-year. Factors such as improved operating leverage, favorable commodity prices, and strong volume growth across various segments contributed to this robust performance. However, despite these positive indicators, the reaction from the stock market was mixed.
The 8% percent decline in Tata Motors’ stock price at open on May 13 to Rs 950 reflects the mixed sentiments prevailing among investors. The conflicting opinions from brokerages further underline the divided views on Tata Motors’ prospects. Investors should carefully weigh these perspectives and conduct their own analysis before making any investment decisions.
JPMorgan’s bullish stance on Tata Motors, with an ‘overweight’ rating and a raised target price of Rs 1,115, suggests confidence in the company’s future prospects. The target price implies an upside of 13 percent from the current level, indicating optimism about potential growth opportunities.
Morgan Stanley’s downgrade to ‘equal weight’ from ‘overweight’ suggests a more tempered view on the stock. While acknowledging Tata Motors’ banner year in FY24, the brokerage believes that incremental upside might be limited. However, it identifies a sharp EV pickup-led turnaround in FY25 as a key upside risk to monitor.
Jefferies’ ‘buy’ call with a raised target price of Rs 1,250 per share further underscores the positive sentiment surrounding Tata Motors. The company’s achievement of its lowest net automotive debt level in six years, coupled with its strong position in the business cycle at JLR, bolsters confidence in its financial trajectory.
Motilal Oswal’s neutral stance on the company is influenced by concerns about the margin dilution from JLR’s EV ramp-up and the moderation in demand across both the commercial vehicle (CV) and passenger vehicle (PV) segments in the Indian market.
Tata Motors remains optimistic about the resilience of the premium luxury segment, which could help mitigate some of the challenges in the broader market. The company’s robust performance in FY24, particularly by its wholly owned subsidiary JLR, underscores its strengths in certain segments.
Nomura’s downgrade to ‘neutral’ from ‘buy’, citing potential demand risks for Jaguar Land Rover (JLR), indicates a cautious stance on the stock. The anticipation of a sluggish start to FY25.
Kotak Institutional Equities’ analysis highlights that Tata Motors’ consolidated EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) was below expectations, primarily due to the underperformance of the domestic commercial vehicle (CV) business. However, the EBITDA of Jaguar Land Rover (JLR) and the domestic passenger vehicle (PV) businesses met their expectations.
Despite the variance in EBITDA performance, Tata Motors managed to generate a significant amount of Free Cash Flow (FCF) amounting to Rs 26,900 crore in FY24. This substantial FCF generation enabled Tata Motors to sharply reduce its consolidated net debt. Additionally, the company remains on track to achieve its goal of becoming net cash positive by FY25E, indicating a strong financial position and effective debt management.
While the weak performance of the domestic CV business may be a concern, the overall financial health of Tata Motors seems promising, especially with its focus on reducing debt and improving cash flow. This indicates resilience and strategic planning to navigate through challenges and capitalize on growth opportunities in the automotive industry.
Disclaimer-
It’s important to note that discussions like are for informational purposes only and should not be taken as specific We are not SEBI registered investment advisor. Whether analyzing a company’s financial health, examining market trends, or discussing technical chart patterns, the goal is to provide insights and perspectives that can help you make more informed decisions according to your own research and investment strategy. Always consider consulting with a financial advisor or conducting thorough personal research before making any investment decisions.
