Tata Motors Stock Plummets 13% as JLR Suspends American Market Sales for a Month

Tata Motors Faces Share Price Decline Amid Tariff Concerns

In a significant downturn, Tata Motors witnessed a staggering 13% drop in its share price, hitting an intra-day low of Rs 535.75. This plunge follows the announcement from its subsidiary, Jaguar Land Rover (JLR), regarding a one-month suspension of shipments to the United States. The company is reportedly evaluating the implications of US tariffs imposed by President Donald Trump on imported vehicles.

Impact of US Tariffs on Tata Motors

Jaguar Land Rover’s decision to pause shipments is strategic. The company aims to recalibrate its trading strategies and collaborate with partners during this period. The tariffs, which include a 25% levy on foreign-made vehicles effective from April 2, are a cause for concern, especially with additional tariffs on auto parts expected by May 3.

Key points of concern:
- JLR relies heavily on the US market, which represents 28-30% of its sales volume.
- Potential price hikes due to tariffs could adversely affect JLR’s sales and profitability.
- Although JLR’s premium brand status may mitigate some impacts, the overall outlook remains uncertain.

Analyst Insights

Arun Agarwal, Vice President of Fundamental Research at Kotak Securities, emphasized the critical nature of the US market for JLR. He noted, “If vehicle prices rise significantly due to tariffs, it could impact JLR’s sales and profitability. The current climate of heightened recession risks adds further uncertainty to earnings forecasts for this financial year.”

Tata Motors’ Strategic Moves

Amid these challenges, Tata Motors is also preparing for a corporate demerger. A shareholders’ meeting is scheduled for May 6 to discuss the division of the company into two distinct entities—one dedicated to commercial vehicles and the other focusing on passenger vehicles, including JLR and electric vehicles.

Financial Performance Overview

In its latest financial report, Tata Motors recorded a 22% decline in profits for the third quarter of the fiscal year. The company’s profit fell to Rs 5,451 crore (approximately $630 million) from Rs 7,025 crore the previous year. Despite the profit drop, revenue from operations increased by 3% year-on-year, reaching Rs 1.13 lakh crore.

Share Price Trends

The recent market performance for Tata Motors has been troubling, with shares dropping 17% over the last five trading days. The stock has experienced a 13% decline in the past month and has lost over 39% of its value in the last six months. In the past year, the shares have seen a significant correction of 45%.

As Tata Motors navigates these turbulent waters, stakeholders are left monitoring the evolving landscape of tariffs and its potential impact on the company’s future.