Shares of Tata Motors declined as much as 8.6 percent on Wednesday, making it a fifth straight day of losses for the homegrown auto major after its third quarter earnings missed street estimates by a wide margin.
Investors and traders took short positions in the stock after it reported a year-on-year decline of 96 percent in its profit for the quarter-ended December.
While most analysts admitted at being negatively surprised by the company’s performance, their reaction has been limited to a downward revision in price target while keeping rating on the stock mostly unchanged.
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CLSA On Tata Motors
- Downgraded to ‘Sell’ from ‘Buy’
- Price target cut to Rs 405 a share from Rs 650 a share
- Expect margins to contract sharply for Jaguar Land Rover and India
- Expect hedging losses to continue at high levels
- See rising incentives due to demand pressures
- Cuts financial year 2018-19 earnings per share estimates by 25 to 31 percent
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Citi On Tata Motors
- Retain ‘Buy’ rating, price target of Rs 660 a share
- Near-term concerns remain but margins guidance is strong in the medium-term
- Jaguar Land Rover’s model cycle seen to improve
- Healthy volumes growth, margins should aid free cash flows
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Jefferies On Tata Motors
- Retains ‘Buy’ rating, price target of Rs 606 a share
- Jaguar Land Rover’s volume outlook remain strong but margins to remain in focus
- Average selling price benefitted considerably on account of GBP depreciation
- Higher than forecasted cost items, weaker mix led to margin contraction
- Management commentary on margins suggests an improvement but mildly so
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