Tata Motors Share Price in Focus Before Q1 Results: Analyst Predictions

Tata Motors’ share price has surged by 46.6% so far in 2024, driven by strong passenger vehicle growth, a stable outlook for commercial vehicles, a focus on electric vehicles, and positive prospects for Jaguar Land Rover (JLR). However, investors are cautious as Tata Motors’ share price dipped by over 1% on Thursday morning ahead of the Q1 results.

Industry Overview and Expectations

In Q1, the passenger vehicle industry saw volumes grow by around 6%, and commercial vehicle volumes grew by about 4%. For Tata Motors, commercial vehicle volumes in India increased by 5.4% year-on-year, while passenger vehicle volumes slightly decreased. Rising raw material prices, especially for aluminum, copper, and precious metals, posed challenges despite soft steel prices.

Tata Motors’ Performance Expectations

Analysts expect Tata Motors’ revenue growth to be driven by JLR and India’s commercial vehicles. The EBITDA margin is likely to improve due to better pricing and cost-cutting measures. EBITDA stands for earnings before interest, taxes, depreciation, and amortization.

Motilal Oswal Financial Services noted mixed results for Tata Motors, with commercial vehicle volumes up 6% year-on-year and passenger vehicle volumes down 1% year-on-year. They predict a sequential contraction in EBITDA margins for commercial and passenger vehicles due to lower volumes. JLR volumes are expected to grow by 3% year-on-year, with an estimated EBIT margin of 7.5%, despite lower volumes and rising costs. Overall, Motilal Oswal expects a consolidated earnings growth of 8.5% year-on-year for Q1.

Jefferies (India) Pvt Ltd highlighted that JLR shipments, excluding the China joint venture, rose by 5% year-on-year, with higher-margin products making up 68% of volumes in Q1FY25, compared to 63% in FY24.

Key Focus Areas

Key points to watch in the Q1 results include management’s outlook on JLR and the demand for commercial vehicles in India.