Brokerages expressed optimism towards Maruti Suzuki India (MSIL), while adopting a more cautious stance on Tata Motors following their Q3 performances. MSIL reported a 16 per cent increase in its consolidated net profit for the December 2024 quarter, reaching ₹3,727 crore, driven by higher sales. On the other hand, Tata Motors witnessed a 22 per cent decline in profit to ₹5,578 crore during the same period due to reduced revenue from its passenger and commercial vehicle divisions.
Tata Motors’ shares closed as the worst performer among the Nifty 50 pack on Thursday, falling by 6.98 per cent to ₹699.95 after hitting a low of ₹683.20 in early trade. Meanwhile, MSIL shares remained flat on the NSE at ₹12,005.
Analysts anticipate MSIL benefiting from various launch opportunities, including electric vehicles (EVs) and growth in exports. Conversely, Tata Motors faces a less optimistic growth outlook across its segments, leading to differing perspectives from brokerage firms.
JM Financial issued the highest target price for MSIL at ₹15,100, down from ₹15,250 previously. The brokerage believes that a more diverse portfolio mix and increased operating leverage will boost margins in the future. CNG and UVs are expected to drive demand momentum in the short term, while exports are identified as a key growth driver. The company’s tech-agnostic approach positions it well to meet changing customer preferences.
Global brokerage Jefferies downgraded Tata Motors to an underperform rating with a target price of ₹660. However, Morgan Stanley maintained an overweight rating on MSIL with a target price of ₹14,942, while retaining an ‘equal weight’ stance on Tata Motors with a target price of ₹853.
Domestic brokerage Emkay Global kept its highest target price on Tata Motors unchanged at ₹950 with a buy rating. Emkay Global expects an improvement in commercial vehicle momentum, albeit gradual, amidst a slower-than-expected uptick in government infrastructure and capital expenditure.
Nuvama Institutional Equities maintained a reduce rating on Tata Motors with a target price of ₹720, noting a 15 per cent year-on-year decline in Q3 results, which fell short of estimates due to realization and margin challenges in JLR and the domestic CV division. Nuvama retained a buy rating on MSIL with an unchanged target price of ₹13,900, highlighting the potential for growth driven by improved penetration of passenger vehicles, new products, and a recovery in hatchback demand.
Motilal Oswal reiterated a neutral stance on Tata Motors with a target price of ₹755, citing ongoing margin pressures at JLR. The firm expects weak demand in key regions, rising cost pressures related to demand generation and EV ramp-up, which may impact margins negatively. In contrast, Goldman Sachs also reiterated a neutral stance on Tata Motors with a target price of ₹800. CLSA maintained an outperform rating for Tata Motors with a target price of ₹930, while UBS issued a sell rating with a target price of ₹760.
Motilal Oswal reiterated a buy rating on MSIL with a target price of ₹14,500, highlighting potential tailwinds from multiple launches, including EVs and SUVs. Elara Capital also reiterated an accumulate rating with an increased target price of ₹14,382 from ₹13,368. HDFC Securities Research maintained a buy rating on MSIL with a target price of ₹14,750, noting a Q3 margin miss due to higher expenses on sales promotions and marketing campaigns.
For Tata Motors, HDFC Securities highlighted ongoing challenges in the JLR business due to a tough global macro environment, high discounting, elevated variable marketing expenses, and increased warranty costs. The firm also noted risks related to consumer acceptance of the upcoming revamped Jaguar portfolio and a slowdown in EV sales globally. HDFC Securities maintained a reduce rating on Tata Motors with a target price of ₹718.
In summary, brokerages are bullish on Maruti Suzuki India due to various growth drivers, while Tata Motors receives a more cautious outlook given the challenges faced by its different divisions.
