Tata Motors shares fall 9% on downgrades after Q4 results. Should you buy, sell or hold?

Shares of auto major Tata Motors on Monday fell up to 7% to the day's low at Rs 975 on BSE after three major global brokerages Goldman Sachs, Morgan Stanley and Nomura downgraded the Nifty stock while Citi suspended rating on Tata Motors following weaker outlook for FY25

of auto major on Monday fell up to 9% to the day's low at Rs 948 on BSE after three major global brokerages , and downgraded the Nifty stock while suspended rating on following weaker outlook for .

While downgrading Tata Motors to neutral from buy, Nomura said could face and the growth in commercial vehicles would also moderate. However, it hiked to Rs 1,141 from Rs 1,057 citing steady performance and fair value.

Similarly, Morgan Stanley also downgraded Tata Motors to equal weight from overweight but hiked target price to Rs 1,100 from Rs 1,013. It said that a sharp EV pickup-led turnaround in FY25 would be a key upside risk to track.

While suspending rating on Tata Motors, Citi said the outlook is cautiously optimistic.

Stating that the Tata company is facing clear headwinds ahead that are likely to hurt its performance in FY25, lowered EPS estimates by 3%/5% for FY25/FY26.

"We expect JLR margins to remain stable over FY24-26, given rising cost pressure as it invests in demand generation, normalizing mix, and EV rampup, which is likely to be margin dilutive. Even in India business, both CV and PV businesses are seeing moderation in demand. We have factored in flat margins for India business over our forecast period," Motilal said. The brokerage has a neutral rating on the stock with a reduced target price of Rs 955.

, however, has an add rating on the auto stock with a target price of Rs 1,100.

"Overall, we expect the FY2025-26E performance to remain healthy, led by steady JLR business performance, driven by an improvement in mix and cost control measures, market share gain in the PV and CV segments and net cash balance sheet by FY2025," Kotak said.

In the March quarter, Tata Motors reported a consolidated net profit of Rs 17,529 crore for the quarter ended March 31, 2024, which was a 46% jump over the net profit of Rs 12,033 crore reported by the company in the year-ago period.

In its guidance, Tata Motors said it remains cautiously optimistic on domestic demand over the full year and expects H1 to be relatively weaker. The premium luxury segment demand is likely to remain resilient despite emerging concerns on overall demand, the company statement said even as it vouched for strong performance in FY25.

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Source: Stocks-Markets-Economic Times