Why is the Tata Motors Ltd stock price down almost 9% today?

Tata Motors Limited (TATAMOTORS.NS), the multinational car manufacturer based in Mumbai, India, has had a rough weekend and Monday so far.

Shares of Tata were down close to 9% today at the time of this article’s writing, and almost 100 Indian rupees (93,80 INR) since Friday morning – losing close to 10% of the total current share price. But why?

Tata’s latest earnings announced

On May 10^th, Tata Motors released their Q4 financial results for 2024.

The earnings were largely within market expectations, and showed resilience during a challenging quarter, with revenue up 13% to ₹120.0K Cr for the entire group, with Tata Motors Ltd itself reporting record high revenues of ₹ 437.9K Cr, an all-time high EBITDA at ₹ 62.8K Cr and net profit of ₹31.8K Cr.  

A cautious outlook – a very cautious reaction

In spite of decent financial results which showed the Tata group having weathered FY 2024 well, the real talking point of the earnings call were the outlooks given for FY 2025 by Tata and its Jaguar and Land Rover subdivisions (JLR).

All of these expressed cautious, slightly bearish expectations for the year ahead. While JLR expected EBIT margins to remain flat for the coming year, and Tata Passenger Vehicles expected “extraneous factors” to keep growth "moderate”.

Meanwhile, Tata Commercial Vehicles described being “cautiously optimistic about domestic demand while keeping a close watch on geopolitical developments, interest rates, fuel prices and inflation.”

Market sentiment did not take kindly to these statements, with the Tata stock price plunging from  ₹1047 on Friday after the earnings were announced to just ₹950.30 today.    

Election nerves for the market

It’s also worth noting that global investors have been jumpy regarding Indian equities of late, as the country is currently in the process of national elections that have the potential to create real political uncertainty for the country if any surprises should appear.

In fact, executive director of Tata Motors Girish Wagh directly referenced this in his statement regarding the earnings, saying that the company’s commercial vehicles sales within India were “impacted by a high base effect of FY23, elections held across 5 states and the announcement of general elections.”