Tata Motors PV Shares Rally 5% Despite Target Price Cuts — Here's Why

Shares of Tata Motors Passenger Vehicles Ltd. are buzzing in trade on Friday even after the brokerages issued target price cuts on the counter in the wake of its fourth quarter earnings. The stock is trading at Rs 355, accounting for gains of almost 5% compared to Thursday's closing price of Rs 338.75. 

This comes against the backdrop of mutliple brokerages issuing target price cuts on the counter, including Jefferies, which maintained an 'underperform' rating while cutting target price from Rs 310 to Rs 300. Meanwhile, Citi maintained a 'sell' call while cutting target price from Rs 345 to Rs 310.

Despite the bearish tone from brokerages, Tata Motors PV was able to scale intraday high of Rs 366 and has shown strong gains in trade today. So what is working for the company?

What worked for Tata Motors?

Although brokerages were bearish, all of them acknowledged Tata Motors PV's Q4FY26 earnings, which were better than estimates.

Margins, in particular, was a positive surprise, standing at 10.7% against estimate of 8.2%. Ebitda, too, saw a big sequential improvement and was 23% above estimates, adding to investors' positive sentiment. 

Tata Motors PV Q4FY26 (Cons)

• Net Profit at Rs 5,783 crore versus estimate of Rs 4,351 crore
• Revenue at Rs 1.05 lakh crore versus estimate of Rs 1.08 lakh crore
• EBITDA at Rs 11,259 crore versus estimate of Rs 8,987 crore
• EBITDA Margin at 10.7% versus estimate of 8.2%

Tata Motors PV also did not incur any commodity impact in Q4, although the company may face the brunt of the elevated raw material prices in the first quarter of FY27.

Another key driver was three new launhes in the EV space for JPL in FY27, potentially in the second quarter. The ramp-up could be a key monitorable going forward. Speaking of JLR, the segment is likely to bounce back in FY27 as well, especially from a depressed base of FY26.

Tata Motors PV's stock levels in the US also remain at lower levels, so capacity addition remains unlikely, which could another positive for the stock.

However, all is not well at Tata Motors PV as JLR constraints still remain while elevated raw material and commodity prices could impact in a big way in FY27. While the domestic PV industry is doing well, it is unlikely to offset the JLR drag, notes Jefferies.

ALSO READ: Tata Motors PV Q4 Results: Profit Shrinks By A Third, Revenue Tops Rs 1 Lakh Crore; Dividend Declared

Essential Business Intelligence, Continuous LIVE TV, Sharp Market Insights, Practical Personal Finance Advice and Latest Stories — On NDTV Profit.