Tata Motors shares get a downgrade, earnings estimates cut on near-term concerns for JLR
Published on 14/05/2025 08:21 AM
Tata Motors shares get a downgrade, earnings estimates cut on near-term concerns for JLROut of the 34 analysts that have coverage on Tata Motors, 19 of them have a "buy" rating on the stock, nine say "hold", while six have a "sell" rating on the stock.By Hormaz Fatakia May 14, 2025, 8:21:39 AM IST (Updated)3 Min ReadShares of Tata Motors Ltd. will be reacting to their March quarter results, that were reported after market hours on Tuesday, May 13.
The numbers were largely higher than expectations and its unit Jaguar Land Rover (JLR) managed to achieve its cash flow guidance for financial year 2025, after its 10th consecutive profitable quarter.
Brokerage firm CLSA has an "outperform" rating on Tata Motors with a price target of ₹805, which implies a potential upside of 14% on the stock from Wednesday's closing levels.
It said that JLR is cautious on demand in financial year 2026 due to tariffs and different macro-economic conditions. However, it added that the luxury Passenger Vehicle market will not have much impact due to these tariff-related uncertainties.
Despite the uncertainties, JLR is confident of delivering on its EBIT margin in financial year 2026.
On the flip side, Jefferies has an "underperform" rating on Tata Motors with a price target of ₹630, which implies a potential downside of 11% from Wednesday's closing levels.
The brokerage anticipates a tough year ahead for JLR, due to the US tariffs, increasing competition in China, and rising customer acquisition costs.
Adding to that is a slowdown in the Indian Commercial Vehicle market, and rising competition in the electric PV space, Jefferies said.
As a result, Jefferies has cut Tata Motors' Earnings Before Interest, Tax Depreciation and Amortisation (EBITDA) estimates for financial year 2026 and 2027 by 8% and 9%, but has increased its Earnings Per Share (EPS) estimates by 3% to 4%.
Citi, who has suspended its rating on Tata Motors, believes that while the management appears positive for its India CV business, there could be some near-term headwinds for the Passenger Vehicles business, particularly within the EV segment.
Kotak Institutional Equities has downgraded the stock to "sell" from its earlier rating of "reduce", with a price target of ₹600 per share, implying a potential downside of 15% from current levels.
Similar to Jefferies, Kotak sees the near-term to remain challenging for JLR, despite turning net cash in financial year 2025. The challenges could come from weak demand trends in China and the impact of tariffs on the US markets. Loss in market share for Tata Motors in its India CV and PV business also remains an area of concern, according to the brokerage.
The brokerage has cut Tata Motors' consolidated EBITDA estimates by 4% and 10% over financial year 2025-2027.
Out of the 34 analysts that have coverage on Tata Motors, 19 of them have a "buy" rating on the stock, nine say "hold", while six have a "sell" rating on the stock.
Shares of Tata Motors ended 1.7% lower on Tuesday, at ₹708.3, before the results were announced.Continue ReadingFirst Published: May 14, 2025 8:11 AM ISTCheck out our in-depth Market Coverage, Business News & get real-time Stock Market Updates on CNBC-TV18. Also, Watch our channels CNBC-TV18, CNBC Awaaz and CNBC Bajar Live on-the-go!Tagsshare market todayTata MotorsTata Motors share priceTata Motors shares