Earnings effect: Tata Motors shares rise 3% as brokerages revise price targets

Shares of Tata Motors rose over 2% in early deals on Monday after the firm reported its earnings for the quarter ended September 2024. The stock climbed 2.69% to Rs 827.45. Market cap of the firm rose to Rs 3.30 lakh crore in the current session. On BSE, 6.48 lakh shares changed hands amounting to a high turnover of Rs 52.68 crore.

The stock has a one-year beta of 1.1, indicating very high volatility during the period.

Tata Motors reported a 11% fall in Q2 profit on Friday. Net profit (attributable to shareholders) came at Rs 3343 crore against Rs 3764 crore profit in the September 2023 quarter. Revenue also fell 3.5% to Rs 1.01 lakh crore in the last quarter against Rs 1.05 lakh crore in the September 2023 quarter. Revenue was largely impacted by lower sales volumes.

Global brokerage CLSA has upgraded Tata Motors to 'Outperform' with a target price of Rs 968 per share. This amounts to an upside of 20 percent from the previous close. CLSA said Tata Motors remains confident in its Jaguar Land Rover (JLR) guidance, projecting robust EBIT margins for FY25 and FY26. While the company is cautious about commercial vehicles (CVs), it expects growth to be driven by new launches in the passenger vehicle (PV) segment.

Another brokerage Nomura has maintaining its 'buy' rating but reduced its target price to Rs 900 from Rs 1,303 per share after a Q2 earnings missed estimates. "JLR’s guidance has been upheld, with a strong rebound anticipated in the second half of FY25. A recovery in India’s CV segment is also likely by Q4, while JLR’s performance has outpaced that of its peers across various markets," said Nomura.

Jefferies has maintained its 'Buy' rating on Tata Motors. It has revised its target to Rs 1,000 from Rs 1,330 per share. JLR is anticipating an improved second half and has maintained its margin guidance for FY25m, said Jefferies. However, Jefferies said a slowdown in demand for both CVs and PVs in India and consequently reduced its FY25-27 earnings estimates by 2-9 percent.

On the other hand, global brokerage UBS has a 'Sell' call on Tata Motors. It has trimmed its target to Rs 780 per share. JLR and CV segments have underperformed, although PV sales were in line with expectations, according to UBS. The brokerage said EBIT was disappointing. Additionally, Tata Motors has lowered its free cash flow (FCF) guidance to £1.3 billion from a prior forecast of £1.8 billion.

Shares of Tata Motors ended lower on Friday. The stock fell 1.72% at Rs 805.70 on BSE. The earnings were announced after market hours.