Tata Motors Shares Tank 7% As Several Brokerages Downgrade The Stock's Rating

Tata Motors’ shares tanked at the bourses on Monday even as the company posted a strong set of numbers for the quarter ended March. The stock slumped around 7% to hit an intraday low of ₹975.60.

What Happened: The auto giant reported a net profit of ₹17,529 crore for the quarter, soaring compared to ₹5,407.8 crore in the same period last year. This result significantly surpassed street estimates of around ₹7,000 crore. The company however had a deferred tax of ₹9,478.24 crore. Consolidated revenue from operations stood at ₹1.19 lakh crore, marking a 13.3% increase from the ₹1.05 lakh crore reported a year ago. The company India business also turned net cash.

Analyst Reactions: Nomura downgraded the stock’s rating to “neutral” from “buy” but raised that price target to ₹1,141 from ₹1,057. The brokerage said the company’s performance in the March quarter was steady. The analyst added that Jaguar Land Rover could face some demand risks going forward.

JP Morgan downgraded the stock’s rating to “equal weight” from “overweight” but raised that price target to ₹1,100 from ₹1,013. The brokerage said that a sharp pick in electric vehicle sales is a key upside risk. Goldman Sachs also downgraded the stock’s rating to “neutral” from “but” reducing the price target to ₹940 from ₹1,000.

CLSA also maintained its “outperform” rating for the stock with a price target of ₹1,181. The global brokerage firm said that the company’s commercial vehicle business margins were ahead of its estimates. The analysts added that while EV sales dragged the margin, the ICE segment saw margins improve.

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Jefferies maintained its “buy” rating for the stock raising the target price to ₹1,250. The research firm highlighted that the company’s net debt fell by 45% to hit a 6-year low. JP Morgan maintained its “overweight” rating for the stock with a price target of ₹1,115. The brokerage said that the auto giant’s March quarter numbers were in line but free cash flow and guidance for the year ahead beat its estimates.

Kotak Securities maintained its “add” rating for the stock with a price target of ₹1,100. The domestic brokerage firm said while the JLR and passenger vehicle segment’s results were in-line with its estimates, the numbers from the commercial vehicles business missed its estimates.

Emkay Global maintained its “reduce” rating for the stock with a price target of ₹950. The brokerage firm said that Tata Motors performance was muted in the March quarter, with limited margin expansion despite increased volumes. Emkay suggests that the peak performance may have passed for all business segments. Factors contributing to this include declining order books, normalising mix, and higher customer acquisition costs at JLR, alongside a flattish growth outlook for domestic commercial vehicles and moderating India PV outlook.

HDFC Securities maintained its “sell” rating for the stock but raised the target price to ₹831 from ₹536. The brokerage firm said that the company has several headwinds facing it.

Price Action: Tata Motors’ share price was down 6.18% to trade at ₹981.95 as the markets opened on Monday.

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