Tata Motors shares crash nearly 9% despite stellar Q4 results
What's the story
Tata Motors saw its shares plummet by nearly 9% to ₹853.30 in early trading. This comes despite the company reporting a staggering 222% year-on-year increase in its consolidated net profit for the fourth quarter of the financial year 2024. The company's profit surged to ₹17,407 crore from ₹5,407.79 crore during the same period last year. Tata Motors anticipates a slow start to FY25, citing an expected fall in local passenger vehicle demand amidst ongoing elections.
Operational highlights
Revenue and EBITDA growth amid market concerns
Tata Motors also reported a 13% year-on-year growth in its revenue from operations, recording ₹1,19,986.31 crore compared to ₹1,05,932.35 crore a year ago. The company's earnings before interest, taxes, depreciation and amortization (EBITDA) for Q4 stood at ₹17,900 crore - a notable increase of 26.6% over the previous year. Despite market concerns about overall demand, Tata Motors remains "cautiously optimistic" about domestic demand over the full year and expects resilience in the premium luxury segment.
Financial milestones
Record revenues and debt-free status
Group Chief Financial Officer of Tata Motors, PB Balaji, announced that the FY24 results delivered the highest-ever revenues, profits and free cash flows for Tata Motors Group. He further stated that "The India business is now debt-free, and we are on track to become net automotive debt-free on a consolidated basis in FY25." This comes as a significant achievement for the company amidst its soaring Q4 profits.
Market response
Mixed brokerage reactions post Q4 results
Following Tata Motors's Q4 results, brokerages have offered mixed suggestions. Morgan Stanley downgraded the counter from 'overweight' to 'equalweight,' but raised the target price to ₹1,100 from ₹1,013. On the other hand, Jefferies maintained its 'buy' rating and increased the target price to ₹1,250 from ₹1,100. These reactions came despite Tata Motors's Q4 results exceeding analysts' average estimates of a profit climb to ₹7,084 crore.
Future prospects
Dividend announcement and JLR's strong performance
Tata Motors's board recommended a final dividend of ₹6 per Ordinary Share and ₹6.20 per 'A' Ordinary Share for the financial year ended March 31, 2024. Despite the slump in shares, Tata Motors anticipates strong demand for passenger cars to continue. The company's Jaguar Land Rover (JLR) unit continued its strong financial performance trend in FY24 with another record-breaking quarter in Q4 FY24, reporting revenue of £7.9 billion, up 11% versus Q4 FY23.