Shares of Tata Motors dropped as much as 8.28 per cent to hit an intraday low of Rs 960.10 per share on Monday. The decline followed the company’s announcement of a subdued outlook despite posting robust quarterly results.

The stock is the top loser on both National Stock Exchange (NSE) and Bombay Stock Exchange (BSE). 

On the demand outlook for Jaguar Land Rover (JLR), Tata Motors noted pressure in certain markets such as the European Union and the UK, while North America shows signs of improvement and demand remains stable in China. 

The current order book stands at approximately 133,000 units, a decrease from around 150,000 units in Q3FY24.

Tata Motors anticipates that its earnings before interest and taxes (Ebit) margin for FY25 will likely remain within a similar range to FY24, around 8.5 per cent. 

Despite expectations of increased variable and fixed market expenses due to planned investments in demand generation, the company expects these to be offset by a full year of increased capacity of certain models. However, it retains its FY26 Ebit margin guidance of 10 per cent.

In the commercial vehicles segment, Tata Motors expects volumes to either remain stagnant or decline year-on-year in FY25, with a slow start in Q1 followed by a recovery in demand from Q2 onwards. 

Additionally, the company foresees cost pressures, particularly in commodity costs, in Q1 and beyond, which it plans to mitigate through price adjustments.

On the passenger vehicle segment, Tata Motors anticipates a moderation in industry growth rate to under 5 per cent year-on-year in FY25. The expectation is based on the exhaustion of pent-up demand and a high base effect from strong volume growth in FY23 and FY24. Moreover, the company considers the likelihood of refilling the channel to be minimal. 

The Ebitda margin for the passenger vehicle internal combustion engine (ICE) business improved to 9.4 percent in FY24 from 8.5 percent in FY23, while the margin for electric vehicles (EVs) remained negative (-1.4 per cent in FY24 versus -0.5 per cent in FY23).

Despite market challenges, Tata Motors reported a whopping increase in profit, which more than tripled to Rs 17,528 crore, driven by a 13.3 percent growth in revenue. 

The company’s quarterly revenue surpassed Rs 1.20 trillion, and for the full year, it recorded a 12-fold jump in net profit to Rs 31,806 crore. 

The board also proposed a final dividend of Rs 6 per ordinary share and Rs 6.20 per ‘A’ ordinary share for FY24. 

At 9:41 AM, shares of Tata Motors were trading 7.78 per cent lower at Rs 965.40 per share. By comparison, S&P BSE Sensex was trading 0.86 per cent lower at 72,036.27 levels.

First Published: May 13 2024 | 9:59 AM IST

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