Tata Motors Ltd. has witnessed a 5% drop in its share price, reaching an intraday low of Rs 1,090.05. This decline comes despite the company reporting a significant 74% year-on-year increase in Q1 FY25 revenue, rising to Rs 5,566 crore from Rs 3,203 crore in the previous year. The drop in Tata Motors’ stock price reflects concerns about lower-than-expected car sales and a moderate growth outlook for its Jaguar Land Rover (JLR) division.

Recent Performance Overview:

• Stock Movement: Tata Motors’ shares have fallen around 3% over the past five days, though they have provided a 12.5% return over the last month. The stock has appreciated by more than 25% in the past six months and has surged 744% over the past five years.
• Sales Data: Tata Motors reported a 19% decline in domestic commercial vehicle (CV) sales for July 2024, with 25,436 units sold compared to 31,216 units in the same month last year. Additionally, domestic passenger vehicle (PV) sales dropped by 6%, from 47,628 units in July 2023 to 44,725 units in July 2024.
• Growth Outlook: The company has provided a moderate growth forecast of 2-3% for its JLR business. This cautious outlook is attributed to subdued market conditions in Europe and ongoing inflationary pressures across the region, as noted by Shridhar Kallani, Automobile Research Associate with Axis Securities.

Market Reaction:

The decline in CV and PV sales has raised concerns among investors, although some analysts view this as an opportunity to “buy on dips.” Tata Motors’ announcement of a demerger of its CV business into a separate entity is expected to unlock additional value for shareholders.

Comparative Performance:

• Benchmark Index: Over the past five days, the Nifty 50 index has fallen by 0.5% but has risen 2.7% over the last month. In comparison, the index has delivered a 14% return over the past six months and over 125% in the last five years.

Outlook:

Despite the recent drop, Tata Motors’ long-term performance remains strong, with substantial gains over the past five years. Investors should consider the company’s strategic moves, such as the demerger, and the potential for recovery in sales and market conditions. The recent stock decline may offer a buying opportunity for those optimistic about Tata Motors’ future prospects and value enhancement initiatives.