Tata Motors Limited (NSE:TATAMOTORS) Just Released Its Third-Quarter Results And Analysts Are Updating Their Estimates

It's been a good week for Tata Motors Limited (NSE:TATAMOTORS) shareholders, because the company has just released its latest quarterly results, and the shares gained 3.2% to ₹506. It was a pretty bad result overall; while revenues were in line with expectations at ₹722b, statutory losses exploded to ₹3.96 per share. 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. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.

See our latest analysis for Tata Motors

After the latest results, the 28 analysts covering Tata Motors are now predicting revenues of ₹3.60t in 2023. If met, this would reflect a sizeable 25% improvement in sales compared to the last 12 months. Earnings are expected to improve, with Tata Motors forecast to report a statutory profit of ₹26.68 per share. In the lead-up to this report, the analysts had been modelling revenues of ₹3.61t and earnings per share (EPS) of ₹29.45 in 2023. 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.

The consensus price target held steady at ₹565, with the analysts seemingly voting that their lower forecast earnings are not expected to lead to a lower stock price in the foreseeable future. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. There are some variant perceptions on Tata Motors, with the most bullish analyst valuing it at ₹703 and the most bearish at ₹315 per share. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.

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. For example, we noticed that Tata Motors' rate of growth is expected to accelerate meaningfully, with revenues forecast to exhibit 19% growth to the end of 2023 on an annualised basis. That is well above its historical decline of 1.4% a year over the past five years. Compare this against analyst estimates for the broader industry, which suggest that (in aggregate) industry revenues are expected to grow 14% annually. Not only are Tata Motors' revenues expected to improve, it seems that the analysts are also expecting it to grow faster than the wider 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. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have estimates - from multiple Tata Motors analysts - going out to 2024, 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.

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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.