Tata Motors share price in focus ahead of Q1 results: Report
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Tata Motors shares have surged 46.6% year-to-date, but cautious trading ahead of Q1 results suggests mixed investor sentiment.
Tata Motors has been a standout performer in the stock market this year, with its share price rising by 46.6% to date. However, investors exhibited caution ahead of the company’s Q1 FY25 results, with the stock trading over 1% lower on Thursday morning.
Analysts’ Expectations:
Strong Gains Driven by Key Factors:
– The impressive rally in Tata Motors’ share price has been underpinned by robust growth in passenger vehicles, a stable commercial vehicle outlook, a strategic focus on electric vehicles, and promising prospects for Jaguar Land Rover (JLR).
Industry and Company Performance:
– The overall industry saw a 6% growth in passenger vehicle volumes and a 4% rise in commercial vehicle volumes during Q1.
– Tata Motors reported a 5.4% year-on-year increase in commercial vehicle volumes in India, while passenger vehicle volumes were marginally down.
Rising Raw Material Prices:
– Analysts are wary of rising raw material costs, particularly for aluminium, copper, and precious metals, which could impact margins. Despite soft steel prices, the prices of aluminium, copper, and lead increased by 4-15% sequentially, according to Axis Securities data.
– Platinum and rhodium prices rose by 8% and 5% respectively, while palladium saw a slight decline of 1%. These price fluctuations are expected to affect Tata Motors’ margins.
Revenue and EBITDA Expectations:
– Nuvama Institutional Equities anticipates revenue growth year-on-year, driven by JLR and the India commercial vehicles division. The EBITDA margin is expected to expand due to better pricing and cost-reduction efforts.
– Motilal Oswal Financial Services (MOFSL) reports a mixed performance for Tata Motors’ India business. Commercial vehicle volumes grew 6% year-on-year, while passenger vehicle volumes declined by 1%. The EBITDA margin for commercial vehicles and passenger vehicles is likely to contract by 190 basis points (bps) and 50 bps respectively, sequentially.
– JLR volumes are expected to grow by 3% year-on-year, with an estimated EBIT margin of 7.5%, down 170 bps sequentially due to an unfavorable product mix, rising expenses, and lower volumes. Overall, MOFSL projects an 8.5% year-on-year growth in Q1 earnings for the consolidated entity.
Key Focus Areas:
– Jefferies (India) Pvt Ltd highlighted that JLR shipments (excluding the China JV) rose by 5% year-on-year but were 11% lower sequentially. The share of higher-margin products (Range Rover, Range Rover Sport, and Defender) in volumes increased to 68% in Q1 FY25 from 63% in FY24.
– Investors will closely watch management’s views on JLR and the outlook for commercial vehicle demand in India during the Q1 results announcement.
As Tata Motors prepares to release its Q1 results, analysts and investors will be keenly observing these key metrics and management insights to gauge the company’s future performance.
