1. Tata Motors shares rally over 4 per cent post Q4 results, should you buy?

Tata Motors shares rally over 4 per cent post Q4 results, should you buy?

Tata Motors shares rallied over 5 per cent on Wednesday after the company fourth quarter earnings beat estimates.

By: | Updated: May 24, 2017 4:55 PM
Tata posted a fall of 16.79 per cent in net profit at Rs 4,336.43 crore for the quarter ending March 31, 2017

Tata Motors shares rallied over 5 per cent on Wednesday after the company fourth quarter earnings beat estimates. The auto major posted a fall of 16.79 per cent in net profit at Rs 4,336.43 crore for the quarter ending March 31, 2017. The company cited the slowdown in domestic business behind the Q4 fall.

Later, the share price of the company ended 4.30 per cent up at Rs 469.45. The share price had opened at Rs 469 and touched a high and low of Rs 472.95 and Rs 459.05, respectively.

Strong performance by the company’s British subsidiary Jaguar Land Rover (JLR) that drove the fourth quarter numbers. However, currency volatilities, which saw the rupee appreciating against the pound, had some adverse impact on the bottomline. Analysts have maintained a ‘Buy’ rating on the stock after the fourth quarter results.

IIFL, which has maintained a ‘Buy’ rating on the stock with a target price of Rs 1,622 believes that Tata Motors is very well placed to benefit from additional capacity coming on-stream, improved industry outlook and opening up of new business avenues.

Another brokerage house KR Choksey, which has a ‘Buy’ recommendation on the stock, will review the rating after a detailed analysis post results. However, after the Q4 results, the brokerage house said that Tata Motors earnings are above estimates. It said, “Top-line growth was aided by healthy sales mix of JLR and by revival in Chinese economy. However, EBITDA margins exceeded our estimate led by lower than expected RM cost and other expenses. PAT exceeded our estimate boosted by other income, FX gains.”

It further added,”net sales stood at Rs 787,466 million which was down by 2.6% y-o-y but improved by 14.9% q-o-q. Strong wholesale volumes partially offset the overall higher marketing expenses. However, on the standalone front M&HCV segment and LCV segment partially offset growth in Passenger vehicle segment. Retail sales including the China JV in the quarter stood at 179509 units, up 13% on strong demand across the product portfolio.”

On Tuesday, the company said that the currency fluctuations had a Rs 27,686 crore impact on consolidated revenue for the year, which ended lower by around Rs 3,000 crore at Rs 2.75 lakh crore.

In terms of outlook, IIFL said that JLR would continue to drive Tata Motors sales. It added, ” Robust performance at JLR will enable strong free cash generation, which will support the revival of the standalone performance of Tata Motors.

Another brokerage house, Edelweiss has maintained a ‘Hold’ rating on the stock with target price of Rs 507. It said, “while a reasonably good quarter is likely to trigger some positive momentum, we believe aging model portfolio and mixed demand environment cap margin.”

  1. No Comments.

Go to Top