Tata Motors shares slump up to 7% despite Q4 PAT climbing 222% YoY; should you buy, sell or hold it?

Shares of auto major Tata Motors in early trade on Monday fell close to 7 per cent to day's low price of Rs 975.45 after posting a mixed set of earnings for the March quarter on Friday. For the reporting quarter, the company's consolidated profit after tax (PAT) climbed 222 per cent year-on-year (YoY) to Rs 17407 crore. Tata Motor's PAT in the same period last year was reported at Rs 5,407.79 crore. Meanwhile, the company's revenue from operations recorded a 13 per cent growth on-year to Rs 1,19,986.31 crore as against Rs 1,05,932.35 crore recorded a year ago.

The auto major—whose popular passenger cars include Nexon, Punch, and Tiago—logged Rs 17,900 crore in fourth-quarter earnings before interest, taxes, depreciation and amortisation (EBITDA), up 26.6 per cent over the year-ago period.

The company's net profit more than trebled on-year owing to a tax credit surge and strong sales of JLR's SUVs, added the Reuters report.

India's third-leading carmaker by sales said it remains cautiously optimistic about domestic demand over the full year and expects the first half of the financial year to be relatively weaker.

Despite emerging concerns about overall demand, the auto major said it expects demand for the premium luxury segment to remain resilient. "We are confident of delivering a strong performance in FY25," it said.

“It is pleasing to report the FY24 results during which Tata Motors Group delivered its highest-ever revenues, profits, and free cash flows. The India business is now debt-free, and we are on track to become net automotive debt-free on a consolidated basis in FY25," said PB Balaji, Group Chief Financial Officer, Tata Motors.

Here's what brokerages suggest on Tata Motors post-Q4 show

Morgan Stanley has downgraded the counter to 'equalweight' from the earlier 'overweight' call and increased the target price to Rs 1100 from Rs 1013.The brokerage said banner year limits incremental upside. The brokerage noted that the sharp electric vehicle (EV) pickup-led turnaround in FY25 would be a key upside risk to track.

Jefferies, on the other hand, continues with its 'buy' rating on the counter and has raised the target to Rs 1,250 from Rs 1,100 earlier. The brokerage said it is bullish on Tata Motors stock given the strong business cycle at JLR, product launch in India passenger vehicle business in 2HFY25 &strong deleveraging. Also, it noted that the company's net auto debt fell 45 per cent sequentially to six-year low.

JP Morgan maintains 'overweight' view with a raised target of Rs 1,115. The brokerage believes that Tata Group auto giant posted in-line 4Q consolidated earnings but free cash flow (FCF) as well as guidance beat expectations. The company's management maintained its guidance of becoming net cash positive in JLR & on a consolidated basis by the end of FY25

Goldman Sachs, keeping a bearish view, double downgrades the stock to 'neutral' from the earlier 'buy' call and slashes the target to Rs 1,040 from Rs 1,080 earlier. 

Tata Motors share price performance

Over the past year, shares of Tata Motors have zoomed 87.5 per cent, outperforming both the Nifty and Nifty Auto indices which gained 19.5 per cent and 60.4 per cent, respectively.