Tata Motors Q4 Profit Zooms 220%, Yet Stock Crashes 8%; Here’s Why

Despite a 220% surge in Q4 profit, Tata Motors' stock fell 8%. Delve into the FY24 highlights and broker forecasts for FY25.

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Despite recording a robust performance in the fourth quarter of the fiscal year 2024 (Q4FY24), Tata Motors Ltd saw its shares fall sharply. On Monday, May 13, 2024, the stock plummeted by over 8%, closing at Rs 959.75 on the National Stock Exchange of India (NSE). This decline occurred after a three-day gain streak, triggered by concerns about domestic demand and downgrade in broker ratings.

Tata Motors Q4FY24 Performance Highlights

Tata Motors reported a substantial increase in consolidated net profit, which soared 220% year-on-year to Rs 17,282 crore in Q4FY24. An improvement in the operating profit margin was noted, rising 160 basis points to 14.9% from 13.3% in the previous fiscal year’s fourth quarter.

Tata Motors Q4 Profit | Liquide App
Tata Motors Q4 Profit | Liquide App

The auto maker’s revenue from operations also grew by 13%, reaching Rs 1.2 lakh crore for the quarter. The surge in Tata Motors’ revenue can be attributed to increased production volumes, particularly in the Jaguar Land Rover (JLR) segment, and robust demand within the Indian market. 

Record-Breaking FY24 Results

In fiscal year 2024, Tata Motors recorded its highest-ever consolidated net profit, reaching Rs 31,106 crore, supported by enhanced margins from its three core sectors: JLR, Commercial Vehicles, and Passenger Vehicles. The company also saw its revenue and EBITDA soar to record-breaking levels at Rs 4.38 lakh crore and Rs 62,800 crore, respectively.

Cautious Outlook for FY25

Despite the strong results, Tata Motors maintains a cautious outlook for the upcoming financial year 2024-25. The company anticipates a weaker performance in the domestic segment in the first half of FY25 but remains optimistic about the resilience of the premium luxury segment.

Dividend Details for FY24

For the fiscal year concluded on March 31, 2024, the board of Tata Motors recommended issuing a final dividend. Ordinary shareholders will receive Rs 6 per share, comprising Rs 3 as a regular dividend and Rs 3 as a special dividend. Holders of 'A' ordinary shares will receive Rs 6.20 per share, including the regular divided and special dividend.

Should You Buy, Hold or Sell Tata Motors? Broker Perspectives

Morgan Stanley adjusted its rating, shifting from 'overweight' to 'equal weight', while raising the target price to Rs 1,100. 

Nomura also revised its rating on Tata Motors from 'buy' to 'neutral', pointing to possible demand challenges for JLR and potential slowdowns in commercial vehicle growth. Nonetheless, the firm increased its price target to Rs 1,141, recognizing the company's consistent performance and valuation.

Motilal Oswal revised its earnings projections for FY25 and FY26 downwards, due to expected challenges such as cost pressures and investments in electric vehicles at JLR. The brokerage has kept a 'neutral' stance on the stock.

Conversely, Kotak Equities retained an 'add' rating on Tata Motors, anticipating robust performance in FY25-26 driven by JLR's solid operations, market share expansions, and a strong balance sheet.

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