Tata Motors Dips 2%: Brokerages Lower Price Targets Amid 3 Major Concerns

Tata Motors’ latest quarterly earnings report, released on May 15, has traders buzzing as the company’s share price has dipped by over 2% in early trading. Despite steady growth in the Indian market, management has flagged geopolitical tensions and tariff issues as major concerns. These challenges, coupled with a sluggish demand for Jaguar Land Rover (JLR) vehicles, have left investors apprehensive, prompting brokerages to reassess their outlook on the stock’s profitability.

Tata Motors: JLR Performance Under Scrutiny

The Tata Group has a global footprint, spanning from Asia to America, making JLR’s international performance a significant worry. Analysts are particularly concerned about several factors impacting JLR, such as:

The discontinuation of specific Jaguar models.
Declining market share in China.
Imposed tariffs in the U.S. market.

P. Balaji, Tata Motors’ Group Chief Financial Officer, noted that they are currently waiting for clarity on the U.S.-U.K. trade agreement, which may influence their strategy. Analysts, however, are preparing for potential volume contractions based on current trends.

Commercial Vehicle Outlook Remains Tepid

Another pressing issue for Tata Motors is the lackluster performance in the Commercial Vehicle (CV) segment. While transporters have seen decent utilization rates, the increasing competition from rail transport and a high performance benchmark indicate limited growth potential in the near future. The company is focused on cost efficiency, but with a subdued demand outlook and rising marketing expenditures, growth in this sector is likely to remain in the low single digits.

Nuvama Adjusts Price Target for Tata Motors

Brokerage firm Nuvama has revised its price target for Tata Motors, lowering it from Rs 720 to Rs 670 per share and maintaining a ‘Reduce’ rating. They anticipate a modest 3% revenue and EBITDA growth over the next two fiscal years. Nuvama highlights the challenges facing JLR, including:

The discontinuation of certain Jaguar models.
Weakening market share in China.
Tariff implications in the U.S. market.

The firm also predicts a restrained performance in the CV division, estimating only 2% growth due to competitive pressures and a high performance base.

Motilal Oswal’s Perspective on Tata Motors

Motilal Oswal has also adjusted its stance on Tata Motors, reducing its target price by 3% to Rs 690, slightly below the current market value of Rs 708. The brokerage emphasizes that JLR is facing numerous hurdles, including:

Uncertainty due to tariffs affecting U.S. exports.
Weak demand in crucial markets like Europe and China.
Rising costs related to VME, warranties, and emissions.

Given these challenges, JLR has refrained from providing financial forecasts for FY26 and beyond. Motilal Oswal projects a 100 basis points drop in margins from FY25 to FY27 and expects ongoing margin pressure for JLR.

In the Indian market, demand for both Commercial Vehicles (CV) and Passenger Vehicles (PV) appears to be stabilizing, and the brokerage has cut Tata Motors’ earnings estimates by 12% for FY26 and 5% for FY27. With no immediate positive catalysts in sight, they have reiterated their Neutral rating and set a target price based on SOTP of Rs 690.

In summary, Tata Motors faces a challenging landscape, grappling with international market fluctuations and domestic demand uncertainties. Investors are advised to stay vigilant as developments unfold.