Tata Motors Q4FY25 Results Show 51% Drop in Net Profit; Share Price Falls Despite Dividend Announcement; Brokerage Reports Offer Negative Outlook.
Tata Motors Share: Tata Motors, the flagship auto company of the Tata Group, has released its March quarter (Q4FY25) results, which have somewhat disappointed investors. The company's consolidated net profit has fallen by 51% to ₹8,470 crore. This decline is attributed to the deferral of a ₹9,000 crore tax liability in the previous fiscal year and ₹566 crore in exceptional expenses this quarter.
Share Price Dips Despite Dividend Announcement
Tata Motors declared a dividend of ₹6 per share for its shareholders; however, this did not result in a positive market response. Following the results announcement, Tata Motors' share price on the BSE fell by approximately 3%, settling around ₹707. Investors had anticipated a strengthening of the share price due to the dividend, but the weak results overshadowed this positive development.
Sluggish Revenue and EBITDA Growth
In the fourth quarter, the company's consolidated revenue saw a marginal increase of only 0.5%, reaching ₹1,18,927 crore. Meanwhile, EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) decreased by 4.1% to ₹16,700 crore. This clearly indicates that rising costs and sluggish demand have impacted the company's operational performance.
Brokerage Firm Reports: What Should Investors Do?
Following the results, major brokerage houses have offered mixed opinions on Tata Motors.
Jefferies has maintained its 'Underperform' rating on the stock and lowered its target price to ₹630. They believe that JLR's (Jaguar Land Rover) weak margins could negatively impact the company's profitability.
On the other hand, Nuvama Institutional Equities has maintained its 'Reduce' rating with a target price of ₹670. Nuvama believes that sluggish demand in global and domestic markets will limit EBITDA growth from FY25 to FY27.
HSBC Securities, however, has downgraded the stock from 'BUY' to 'Hold' but increased its target price to ₹770. HSBC believes that competition in the passenger vehicle segment and slow improvement in the commercial vehicle segment are affecting the company's performance.
Company Focus: Debt-Free Status and Cost Savings
Tata Motors' Group CFO, P.B. Balaji, stated that the company has become debt-free in its automotive business, leading to a reduction in interest costs. The company's strategy is now focused on cost reduction and improving operational efficiency.
