1:1 Split: Tata's Auto Stock In Unrest, Falls 8% YTD, Nears 52-Week Low; But Emkay Says BUY For Rs 950 Target

1:1 Split: Tata's Auto Stock In Unrest, Falls 8% YTD, Nears 52-Week Low; But Emkay Says BUY For Rs 950 Target

Tata Motors Share Price Crashed: Tata Group-backed automaker, Tata Motors has continued to witness selling pressure in 2025 so far and February 3rd was no different. The heavyweight auto stock dipped by 2.8% on BSE on Monday. It hovered near the 52-week low of Rs 684.25 apiece. Tata Motors extended its losses further by 8% year-to-date after global brokerages downgraded their ratings and trimmed their target prices with Jefferies setting around Rs 660 target. However, domestic brokerages are optimistic about Tata Motors even after its weak Q3 earnings. Emkay Global is the latest to recommend BUY with a target price of a whopping Rs 950.

Tata Motors Share Price:

At the time of writing, Tata Motors stock traded at Rs 691.85 apiece down by 2.02% on BSE. The stock dropped as much as 2.8% in the early trade of February 3rd and touched an intraday low of Rs 686.05 apiece which was near its 52-week low of Rs 684.25 apiece. YTD, Tata Motors shares are down by 8%.

The performance comes after Tata Motors posted sales of 80,304 vehicles in January 2025, which was down from 86,125 units in January 2024. Further, during the month, commercial vehicle sales were muted to 31,988 units, while the sales of passenger vehicles dropped by 11% to 48,316 units compared to the same month a year ago.

Also, the company registered a 22.5% decline in net profit to Rs 5,451 crore during Q3FY25, compared to the net profit of Rs 7,025 crore reported a year ago same quarter. Also, EBITDA declined by 14.7% to Rs 13,081 crore in Q3FY25, as against Rs 15,333 crore EBITDA in Q3FY24. However, revenue climbed by 1.8% to Rs 1.13 lakh crore in the third quarter of FY25, compared to revenue of Rs 1.11 lakh crore in Q3 of FY24.

Going ahead, Tata Motors is expected to complete the demerger of its business in a 1:1 ratio. The company’s demerger will be of two separate listed companies housing A) the Commercial Vehicles business and its related investments in one entity and B) the Passenger Vehicles businesses including PV, EV, JLR, and its related investments in another entity. The demerger is expected to be completed by March 2025.

Should You Buy Tata Motors Share Price?

As per Emkay Global, TTMT’s Q3 performance was below expectations driven by sequential ASP decline at JLR and standalone operations, as well as lower than expected margin expansion in JLR (JLR margin up by 244bps QoQ to 14.2%, consolidated margin stable at 11.5%). TTMT has marginally reduced FY25E JLR revenue guidance to £29bn (vs £30bn earlier, on general market challenges, especially in China), and maintained guidance on EBIT margin (~8.5%) and FCF (£1.3bn) while acknowledging the need for a strong Q4 to meet it (largely driven by higher production and usual seasonality-led strong cash generation in Q4).

Noteworthily, Emkay’s note also said that India’s CV outlook is improving amid green shoots in underlying metrics like fleet utilization levels, freight rates, and financing. Encouragingly, the India electric PV business turned EBITDA positive (10%/1.7% margin with/without PLI); TTMT expects a sequential improvement in both, CVs and PVs in Q4. We believe that while global demand uncertainties persist, JLR’s focus on mix and profitability would help the broad-based improvement to continue (we build in ~£1bn FCF and net-cash balance sheet in FY25E).

Hence, on the valuation, Emkay said, “We also expect the CV momentum to improve albeit gradually, amid slower than expected pick up in government infra/capex spends. We trim our EPS estimates by ~2.5% largely due to the Q3 margin miss; we maintain BUY with unchanged SoTP-based TP of Rs950.”

Disclaimer: The write-up is just for information purposes, and is not a recommendation to buy, sell or hold. We have not done fundamental or technical analysis and have no opinion on article mentioned. Neither, the author nor Greynium Information Technologies should be held liable for any losses. Please consult a professional advisor.

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