Tata Motors shares up 97% in 1 year. Should you book profit post Q4 results?

Tata Motors' Q4 results missed Street estimates on revenue and Ebitda fronts. The best may be behind for all Tata Motors businesses and one should expect a moderate growth in FY25 due to a high base, said a couple of analysts who have a 'reduce' rating on the Tata group stock. 

The Tata firm stayed cautiously optimistic across businesses, with H1 expected to be weaker and the premium luxury segment seen as resilient amid overall emerging demand concerns. 

Emkay Global said Tata Motors' Q4 earnings were muted, with limited margin expansion across businesses, despite higher volumes. While deleveraging progress continued, it believes the best may be behind for all businesses amid declining orderbook, normalising mix, flattish growth outlook for domestic CV space; and moderating India PV outlook. 

This brokerage has retained its 'Reduce' rating on the stock, with an unchanged target price of Rs 950 per share.

Tata Motors Ltd reported a 45.67 per cent year-on-year (YoY) rise in consolidated net profit at Rs 17,529 crore for the March quarter compared with Rs 12,033 crore in the same quarter last year. The consolidated sales for the quarter stood at Rs 1,19,986 crore, up 13.3 per cent, the JLR owner said in a BSE filing. Ebitda margin for the quarter came in at 14.9 per cent, up 160 basis points YoY.

Nuvama said Tata Motors' revenue and Ebitda missed estimates slightly due to lower-than-expected numbers in India CV and PV divisions. JLR order book fell from 1,48,000 units in December to 1,33,000 units in March, it said.

The order book exhaustion and a high base should lead to single-digit growth in FY25E, it suggested. 

"Besides, a muted showing in India CV is likely due to loss of share to railways (DFC), slowdown in infra spend and high base.  We are building in a moderate revenue/EBITDA CAGR of 8 per cent/13 per cent over FY24–26E versus 21 per cent/25 per cent over FY21–24. Tata Motors has rallied 15 per cent/ 60 per cent in past three/six months, and 1-year forward EV/EBITDA is 6 times against 5-year mean of 5 times. Retain ‘REDUCE’ with target at Rs 940 (unchanged)," Nuvama said.

The Tata Motors stock is up 32 per cent in 2024 so far and 97.22 per cent in the past one year.