Tata Motors Ltd shares on Thursday settled 1.07 per cent lower at Rs 709.55 per cent. At this closing value, the stock has corrected 30 per cent in the last six months. The automaker reported a 22 per cent fall in consolidated net profit, at Rs 5,578 crore, for the December 2024 quarter (Q3 FY25). It had posted a profit of Rs 7,145 crore in the same quarter last fiscal. Consolidated total revenue from operations stood at Rs 1,13,575 crore in Q3 FY25 compared to Rs 1,10,577 crore in the year-ago period.
The company's earnings were impacted due to a drop in Jaguar Land Rover's (JLR's) performance. "Revenue and ROCE (return on capital employed) targets (for JLR) have been cut a little bit. This is the effect of what happened in China during the course of the year, impacting our volume in China, and hence our revenue. When you take revenue down, then the EBIT impact and the ROCE targets are a natural flow-through. So it's driven by the same thing, the move in the China market that I don't think anybody anticipated when we set our target set for FY25 a year or so ago," Richard Molyneux, CFO at JLR, stated in a recent earnings call.
"We need some time, I think, as the rest of the industry to work out whether what's going on in China is cyclical and it will rebounce, whether it will not rebounce or whether it will go further down from here. I think the jury's out on that. It would be too easy to say it will just rebound. So we are being cautious in China," he also said.
A market expert said investors who are holding the stock may consider averaging Tata Motors at current levels adding that Rs 680-700 is the likely bottoming out zone for it.
Akshay Bhagwat, Senior Vice-President of Derivatives Research at JM Financial Services, said the counter has fallen in the last six months. "It is currently trading in the oversold zone and there is a probability that favours a bounce-back rally in Tata Motors. Rs 680-700 is the estimated range where the stock might try to bottom out. If there is a recovery rally, we may see Rs 820-840 levels. From a long-term perspective, momentum is completely off. Investors can consider taking an exit on a rally around Rs 810. If you are open to averaging, this is the time to buy the stock for a recovery rally till Rs 810," the market expert told Business Today.
Kranthi Bathini, Director of Equity Strategy at WealthMills Securities, said, "Investors with a long-term view can definitely hold on to the stock. We can see some pressure on Tata Motors in the medium to short term due to JLR numbers and volatility in global markets, including China. Demerger of commercial vehicle (CV) business is also on the cards" The automaker attracts around 67 per cent of its revenues from Jaguar Land Rover while JLR gets nearly 27 per cent volumes from China.
Ravi Singh, Senior Vice-President (Retail Research) at Religare Broking said the stock can hit Rs 730 in the near term adding that keep a stop loss placed at Rs 680 for this trade.
Osho Krishan, Senior Research Analyst - Technical & Derivatives at Angel One, said, "The technical outlook appears bleak with immediate support seen in the Rs 700-670 range. On the upside, Rs 760 presents a key resistance level. A sustained move above this point could only trigger fresh momentum in the stock."
Sebi-registered research analyst AR Ramachandran said, "Tata Motors stock has strong support at Rs 683. A daily close above the resistance of Rs 725 could lead to an upside target of Rs 782 in the near term."
As of December 2024, promoters held a 42.58 per cent stake in the company.