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Tata Motors share price skyrockets 9% despite net loss in Q4; targets cut but analysts remain bullish

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Analysts believe Tata Motors’ results were a mixed bag, and expect near term headwinds for the stock. They have trimmed the target prices, but have maintained their ‘Buy’ calls on Tata Motors stock.

Tata Motors’ share price rallied 9.6% on Friday to hit an intraday high of Rs 408 per share as investors reacted to the auto major’s January-March quarter results. Tata Motors reported a consolidated net loss of Rs 1,033 crore in the fourth quarter of the previous fiscal year, down from Rs 7,605 crore in the same period last year. Analysts believe Tata Motors’ results were a mixed bag, and expect near term headwinds for the stock. They have trimmed the target prices, but have maintained their ‘Buy’ calls on Tata Motors stock.

Results at a glance

Revenue came in at Rs 78,439 crore, down from Rs 88,627 crore in the year-ago period.

Tata Motors reported EBITDA at Rs 8,800 crore.

JLR Revenue came in at £4.8 billion down 27.1%, EBITDA at 12.6%

Tata commercial vehicle Revenue was Rs 18.500 crore, up 29.3%, EBITDA at 5.9%

Tata passenger vehicle revenue Rs 10.500 crore, up 62.0%, EBITDA at 6.9%

Tata Motors’ management said that demand remains strong despite geopolitical and inflation concerns. “We expect performance to improve through the year as the China COVID and semiconductor supplies improve and aim to deliver strong EBIT improvement and free cash flows in FY 23 to get to near net auto debt-free by FY 2024,” they added. Strong demand for New Range Rover has helped order book to a new record at more than 1,68,000 units.

Analysts trim targets, retain ‘Buy’ calls

Motilal Oswal: BUY
Target price: Rs 485 | Upside: 18.8%

Analysts at Motilal Oswal said that the results of Tata Motors were a mixed bag with Jaguar Land Rover missing estimates while commercial and passenger vehicle segment beat their estimates. Tata Motors has cut their FY23/FY24 consolidated EPS estimate by 12% each owing to rising covid-19 in China, cost inflation, and rising Indian Rupee. “The stock trades at 13.4x FY24E consolidate P/E and 3.2x EV/EBITDA ratio. We maintain our Buy rating, with a TP of Rs 485 per share,” analysts said.

ICICI Securities: BUY
Target price: Rs 677 | Upside: 65%

ICICI Securities has cut its target price from Rs 703 per share earlier to now Rs 677 apiece but retain the ‘Buy’ call. “Continued market share gains in the domestic PV business, CV upcycle and delivery on FCF generation (aim is to be auto debt-free by FY24E) coupled with aggression in building the EV portfolio resonate well with investor expectations,” ICICI Securities said. 

Yes Securities: BUY
Target price: Rs 520 | Upside: 27%

Analysts said that several factors surprised positively such as a reduction in net auto debt, however, these variables may moderate in the near term. Yes Securities believes the ongoing chip shortages compounded by UK-Russia tension and recent China lockdowns could both sales and component supplies for Tata Motors. “Tata Motors continue to remain our top pick, given its improving India franchise, early leadership in EVs in India, and JLR’s aggressive cost controls,” they added,

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