Tata Motors has once again been battered in the early trading session today and was trading at its lowest level in a year at Rs 684.25.
Tata Motors’ share price started at Rs 715 after beginning the session at Rs 752.45. These were the shares that were at Rs 703.90, and it was 6.45% down when the article was being prepared. It had a market capitalization of Rs 2,59,132.79 crore.
The decline in share prices followed the release of the company’s third-quarter (Q3 FY25) financial performances on Wednesday, which did not meet market forecasts. The overall stock performance was corrected after KPN’s earnings came in considerably lower than expected, and several brokerage firms downgraded it alongside adjusting their predicted price.
The company’s profit declined by 22 percent YoY to Rs 5,451 crore during the October-December quarter. However, revenue from operations rose 3% YoY to Rs 1.13 lakh crore. For the financial year ending March 2020, the company’s EBITDA was down by 15% YoY to INR 13,032 crore, and the EBITDA margin shrank by 240 bps to 11.5%.
Weaker than expected earnings led Jefferies, a global brokerage firm, to reduce its rating on Tata Motors from a ‘Buy’ to an ‘Underperform’. The firm also lowered its price estimates to Rs 660 from Rs 930. Typically, the downgrade meant that Jefferies was predicting that the stock was going to come under pressure in the months that followed.
Nuvama Institutional Equities has cut its price estimate for Tata Motors by 4% to Rs 720 and reiterated sell. Nuvama said it had lowered its FY25 EBITDA estimate for the automobile major by 4%. The brokerage firm noted that it forecasted that revenue and EBITDA would grow at a mere 2% per year from FY25 to FY27.
Automobile major Tata Motors luxury brand Jaguar Land Rover (JLR) is expected by Nuvama to see a volume decline in the coming months due to a deep order book, Jaguar model dropouts, and weakening in key markets.
Segment Performance Insights
Breaking down Tata Motors’ performance by segment reveals further nuances:
- Commercial Vehicles (CV): Revenue declined by 8.4% year-on-year to ₹18,400 crore. However, EBITDA margins improved due to cost-saving measures.
- Passenger Vehicles (PV): Revenue fell by 4.3% year-on-year to ₹12,400 crore, although EBITDA margins expanded due to effective cost control strategies.
The mixed results across segments highlight both challenges and opportunities within Tata Motors’ diverse portfolio.