Tata Motors shares: For the auto giant, the outlook remains dim. Tata Motors reported another muted quarterly performance as net profits dropped by 22% year-on-year (YoY) to Rs 5,451 crore.
This was primarily owing to two factors that took a toll on the profit figure. First, its luxury arm, JLR (Jaguar-Land Rover) witnessed a drop in volumes alongside a subdued demand outlook in international markets. Second is the declining revenue in PV (Passenger vehicle) and CV (Commercial Vehicle) segments.
At 10:00 am, Tata Motors' shares were trading at Rs 703, down by nearly 7% on the National Stock Exchange.
Volumes declined by 2% year-on-year to 111.2k units, falling short of the expected 114k units as per the estimates of Motilal Oswal. Ebitda margin dropped by 2 percentage points or 200 basis points as compared to last year. However, the actual margin of 14.2% was still better than the expected 13.5%.
The auto giant managed to keep its costs somewhat in check, but the overall margin decline points to ongoing pressure from weaker sales.
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Tata Motors' shares have faced continued pressure throughout last year. On an annual basis, the company has struggled to stay in the positive territory, with the stock falling nearly 40% from its 52-week high of Rs 1,179.
Motilal Oswal has maintained its 'Neutral' stance on the stock with a target price of Rs 755. In the luxury segment, the brokerage house believes that margin pressure will continue in the quarters ahead. "We expect margin pressure to persist at JLR over FY24-27, given: 1) weak demand in key regions, 2) rising cost pressure as it invests in demand generation, and 3) EV ramp-up, which is likely to be margin-dilutive," the brokerage house said.
Nuvama, on the other hand, has retained its 'Reduce' stance with a revised target price of Rs 720. "We expect the India CV division to turn in a muted performance (1% CAGR) owing to moderate road construction spends and a high base," the global brokerage house said.
