Tata Motors Shares Slip Despite Strong Q4 Performance as Jefferies Maintains ‘Underperform’ Rating
Tata Motors, one of India’s flagship automotive giants under the Tata Group umbrella, witnessed a dip in its stock price despite posting a robust performance in its Q4 FY25 earnings. On Tuesday, the company’s shares declined by 2.10%, even as it reported a solid 56% quarter-on-quarter (QoQ) growth in net profit. The muted stock reaction came after global brokerage firm Jefferies maintained an “Underperform” rating on the stock, citing future headwinds that could weigh on performance.
Strong Earnings, But Investors Unimpressed
Tata Motors reported a QoQ net profit surge of 56%, climbing from ₹5,485 crore in Q3 FY25 to ₹8,556 crore in Q4 FY25. This was driven by improved operating efficiencies and better cost management. However, the year-on-year (YoY) net profit dipped significantly by 51.18%, primarily due to an exceptional deferred tax gain that inflated profits in Q4 FY24.
Revenue for the fourth quarter rose to ₹119,503 crore, marking a 6.12% increase from the previous quarter and a marginal 0.39% YoY rise. The company also announced a ₹6 per share dividend (300% of face value), reflecting continued shareholder value creation.
Despite these strong numbers, investors seemed cautious, likely reacting to the global outlook and analyst commentary.
Jefferies Maintains ‘Underperform’ with a 17% Downside
Global brokerage firm Jefferies remains skeptical about Tata Motors’ near-term prospects. While acknowledging the company’s strong free cash flow generation and operational efficiency, Jefferies expressed concerns over upcoming challenges such as:
- Softening demand in India’s truck market
- Increased competition in the electric vehicle (EV) segment
- A slight dip in Q4 EBITDA despite higher revenues
As a result, the brokerage has lowered its FY26–27 EBITDA estimates by 8%, anticipating margin pressure. Interestingly, it has raised EPS estimates by 3–4%, signaling improved earnings quality or cost rationalization.
Jefferies has increased its target price slightly from ₹625 to ₹630. However, given Tata Motors’ current market price of ₹698, the revised target still represents a potential downside of 10%—reinforcing the brokerage’s underperform stance.
Financial Summary of Q4 FY25
| Metric | Q4 FY25 | Q3 FY25 | QoQ Change | Q4 FY24 | YoY Change |
|---|---|---|---|---|---|
| Revenue (₹ Cr.) | 119,503 | 112,608 | +6.12% | 119,033 | +0.39% |
| Net Profit (₹ Cr.) | 8,556 | 5,485 | +55.98% | 17,528 | -51.18% |
| Dividend Per Share (₹) | 6 | — | — | — | — |
Key Financial Ratios
| Parameter | Value |
|---|---|
| Market Cap | ₹2,57,254 Cr |
| Current Price | ₹699 |
| 52-Week High/Low | ₹1,179 / ₹536 |
| Stock P/E | 10.8 |
| Book Value | ₹315 |
| Dividend Yield | 0.43% |
| ROCE | 20.0% |
| ROE | 23.6% |
| Face Value | ₹2.00 |
About Tata Motors
Tata Motors is a major player in both the commercial and passenger vehicle markets in India. With a global footprint across 125+ countries, it operates 7 manufacturing units and maintains 9,400 touchpoints worldwide.
Its prominent subsidiaries include Jaguar Land Rover (UK) and Tata Daewoo (South Korea). Additionally, the company has strategic joint ventures such as Tata Hitachi Construction Machinery and collaborations with Stellantis, which manufactures parts for Fiat Chrysler and Tata-branded vehicles.
Investor Sentiment: Caution Ahead?
While Tata Motors has delivered a solid operational performance, the stock’s recent fall reflects investor concern over future growth visibility, especially in the face of economic uncertainties and industry challenges. The conservative stance by Jefferies adds another layer of caution, signaling that the stock may already be priced near its short-term potential.
Q&A: Understand the News at a Glance
Q1: Why did Tata Motors stock fall despite good Q4 results?
The stock fell by 2.10% as investors responded to Jefferies’ “Underperform” rating and warnings of future challenges in the truck and EV segments, despite a 56% QoQ profit growth.
Q2: What is Jefferies’ target price for Tata Motors, and what does it indicate?
Jefferies has set a target price of ₹630, implying a 10% downside from the current price of ₹699.
Q3: How did Tata Motors perform financially in Q4 FY25?
It reported revenue of ₹119,503 crore and net profit of ₹8,556 crore, with a 56% QoQ increase in profit.
Q4: What is the declared dividend by Tata Motors?
The company has recommended a dividend of ₹6 per share, or 300% of the face value.
Q5: What are the key concerns raised by Jefferies?
Soft demand in trucks, increasing EV competition, and slight EBITDA pressure were cited as future concerns.
Conclusion:
Tata Motors continues to showcase its operational strength, but near-term uncertainties highlighted by Jefferies have led to cautious investor sentiment. With global markets evolving rapidly, investors should weigh both the company’s solid fundamentals and the potential risks before making investment decisions.
For more market insights, follow our news.
Stay tuned for more updates and insights on the stock market! For more insights on investing in the Indian stock market, check out resource like MoneyControl, ET, NSE India.