Tata Motors Share Price Falls by 4% on Demand Concerns; Brokers are Still Bullish

Shares of Tata Motors dropped by over 4% to ₹1,095 per share on August 2, despite the company reporting stronger-than-expected results for the June quarter. This decline came after the management's comments suggested a weak global demand for the rest of the fiscal year. However, brokerages remained mostly positive about the automaker, noting that the CV segment and Jaguar Land Rover (JLR) exceeded market expectations.

At 9:40 AM IST, Tata Motors share price dropped as much as 4.76% to reach an intraday low of ₹1,090.05 per share. Jefferies issued a 'buy' recommendation for Tata Motors and increased the target price to ₹1,330 per share, pointing to stronger-than-expected EBITDA in the India CV segment. Similarly, Nomura maintained a positive outlook, setting a target price of ₹1,303 per share, thanks to JLR's strong performance in tough market conditions.

In the domestic market, Tata Motors' CV revenues increased by 5.1% year-on-year to ₹17,800 crore, with EBIT margins improving by 240 basis points to 8.9%, driven by better realizations and material cost savings.

JLR's revenue grew by 5.4% during April-June to GBP 7.3 billion, with EBIT margins of 8.9%, up 30 basis points due to favorable volume, mix, and material cost improvements.

Conversely, UBS analysts maintained a 'sell' rating for Tata Motors, raising the target price to ₹825 from ₹800, citing pressure in the passenger vehicle (PV) segment. PV revenues fell by 7.7%, indicating challenging market conditions, but EBITDA increased by 50 basis points to 5.8%, driven by material cost reductions.

Looking ahead, JPMorgan analysts highlighted the need for better performance in the India PV segment in the second half of the fiscal year. They maintained an 'overweight' rating and increased the target price to ₹1,250 per share from ₹1,115.

Overall, Tata Motors reported a 74% year-on-year increase in its Q1FY25 consolidated net profit to ₹5,566 crore from ₹3,203 crore, while revenue from operations rose by 5.7% year-on-year to ₹1,07,316 crore.

The Indian automaker's consolidated EBITDA grew by 19% year-on-year to ₹15,785 crore, with the operating margin expanding to 14.6% from 12.9% in the same period last year.

Tata Motors Ltd (Tata Motors) is engaged in manufacturing and distributing automobiles, including passenger cars, utility vehicles, trucks, buses, and defense vehicles. The company also offers engineering services, automotive solutions, construction equipment manufacturing, automotive vehicle components, and supply chain activities through its subsidiaries.

The company produces machine tools and factory automation solutions, high-precision tooling, and plastic and electronic components for automotive and computer applications, as well as engines for industrial and marine applications. Its products are marketed under the brands Jaguar, Land Rover, and Tata Motors. Tata Motors operates in regions including Europe, the Middle East, North America, Africa, Asia, Russia, Oceania, Central America, and South America, with its headquarters located in Mumbai, Maharashtra, India.