Tata Motors shares: Down 41% from 52-week high, can the auto stock recover after Q4 earnings?

Shares of Tata Motors were trading lower today after the Tata Group firm reported its Q4 earnings. The stock fell 3% to Rs 686 in the current session against the previous close of Rs 707.90 on BSE. Market cap of the Tata Group firm fell to Rs 2.55 lakh crore. The stock has a one-year beta of 1.2, indicating very high volatility during the period

Meanwhile, the stock has slipped 41% from its 52 week high of Rs 1179.05 reached on July 30, 2024. It has also fallen below the Rs 700 mark after Q4 earnings. 

The firm announced a 51% fall in net profit to Rs 8,470 crore in the last quarter against Rs 17,552 crore in the year ago period. Revenue climbed marginally to Rs 1,18, 927 crore in he last quarter against Rs 118300 crore in the year ago period. 

EBITDA climbed 0.6% to Rs 16,644 crore in Q4. The board of the firm announced a final dividend of Rs 6.00 per Equity Share. 

In terms of technicals, Tata Motors stock is neither oversold nor overbought on charts, indicates its Relative Strength Index (RSI) of 61.9. A RSI value above 70 indicates a stock is overbought and below 30 denotes that it is oversold on charts. 

The stock has seen very high volatility with its beta climbing to 1.3 in a year. 

Brokerage Jefferies has maintained its underperform call on the auto stock. It has raised target price to Rs 630 from Rs 625 for the Tata Motors stock. The firm saw a slight dip in EBITDA in Q4, but has strong free cash flows. 

The brokerage predicts a a tough year ahead as India truck demand is soft along with rising competition in the EV space. The foreign brokerage cut FY26-27E EBITDA by 8% but raised EPS by 3-4%. 

Another brokerage Nuvama has retained 'Reduce' call with an SotP-based target price of Rs 670  against the earlier Rs 720. 

Pointing to the muted Q4 numbers, the brokerage said JLR demand is weak in near-term owing to tariff uncertainties in US and continuing market share losses in China. 

It expects revenue/EBITDA CAGR of 3% each over FY25-27E. 

The company is focusing on cost savings amid a muted demand outlook. An increase in marketing/sales promotion spends in the global and domestic markets will lead to a muted 3% EBITDA CAGR over FY25-27E. 

CLSA has a price target of Rs 805 on the auto stock. 

JLR delivered on its FY25 guidance with EBIT margin at 8.5%, being net cash positive (£0.3bn), and free cash flow (FCF) generation of £1.5bn.

The global brokerage said JLR was cautious on demand in FY26 due to tariff & different macro-economic conditions. JLR's Q4 EBIT margin came at 10.7%, in line & up 160 bps QoQ.

Brokerage Emkay Global said Tata Motors was well-placed to weather near-term risks. Its valuations remained attractive it added while suggesting a price target of Rs 800 on the stock.