Tata Motors Limited Just Missed EPS By 33%: Here's What Analysts Think Will Happen Next

Shareholders might have noticed that Tata Motors Limited (NSE:TATAMOTORS) filed its second-quarter result this time last week. The early response was not positive, with shares down 2.4% to ₹805 in the past week. Statutory earnings per share fell badly short of expectations, coming in at ₹9.71, some 33% below analyst forecasts, although revenues were okay, approximately in line with analyst estimates at ₹1.0t. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

View our latest analysis for Tata Motors

After the latest results, the 29 analysts covering Tata Motors are now predicting revenues of ₹4.56t in 2025. If met, this would reflect an okay 3.7% improvement in revenue compared to the last 12 months. Statutory earnings per share are forecast to plummet 34% to ₹59.55 in the same period. Before this earnings report, the analysts had been forecasting revenues of ₹4.62t and earnings per share (EPS) of ₹64.19 in 2025. So it looks like there's been a small decline in overall sentiment after the recent results - there's been no major change to revenue estimates, but the analysts did make a minor downgrade to their earnings per share forecasts.

It might be a surprise to learn that the consensus price target fell 13% to ₹999, with the analysts clearly linking lower forecast earnings to the performance of the stock price. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. Currently, the most bullish analyst values Tata Motors at ₹1,316 per share, while the most bearish prices it at ₹767. As you can see, analysts are not all in agreement on the stock's future, but the range of estimates is still reasonably narrow, which could suggest that the outcome is not totally unpredictable.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. It's pretty clear that there is an expectation that Tata Motors' revenue growth will slow down substantially, with revenues to the end of 2025 expected to display 7.5% growth on an annualised basis. This is compared to a historical growth rate of 13% over the past five years. Compare this to the 14 other companies in this industry with analyst coverage, which are forecast to grow their revenue at 8.1% per year. So it's pretty clear that, while Tata Motors' revenue growth is expected to slow, it's expected to grow roughly in line with the industry.

The Bottom Line

The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. They also reconfirmed their revenue estimates, with the company predicted to grow at about the same rate as the wider industry. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of Tata Motors' future valuation.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. At Simply Wall St, we have a full range of analyst estimates for Tata Motors going out to 2027, and you can see them free on our platform here..

That said, it's still necessary to consider the ever-present spectre of investment risk. We've identified 1 warning sign with Tata Motors , and understanding it should be part of your investment process.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.