Tata Motors Shares Slumped 37% in 6 Months; Here’s What Analysts Have to Say
Shares of Tata Motors have experienced a sharp decline of 37.23% over the past six months, closing at Rs 583 on Wednesday.
- The stock has struggled, mainly due to challenges facing its Jaguar Land Rover (JLR) unit, especially in light of US tariff impositions.
- JLR has temporarily paused shipments to the United States for April 2025, reacting to a 25% tariff announced by the US government on imported vehicles.
Tata Motors stated that its UK-based subsidiary JLR is evaluating multiple options to address the impact of US tariffs.
- The company clarified that no formal decision or action plan has been finalized yet.
- JLR continues to review ways to mitigate the effects of these increased tariffs on its business operations in the US market.
JLR’s Quarterly Performance and Global Wholesales
In the Q4 FY25 period, Tata Motors reported a 3% YoY decline in global wholesales, reaching 3,66,177 units.
- JLR contributed 1,11,413 vehicles to this total, reflecting a 1% increase compared to Q4 FY24.
- The company disclosed that Jaguar wholesales for the quarter were 7,070 vehicles, while Land Rover wholesales stood at 1,04,343 vehicles.
- It’s important to note that these figures exclude CJLR volumes, which are from a joint venture with Chery Automobiles.
Tariff Impact and JLR’s Market Performance
The recent US tariff imposition has had a significant impact on JLR, prompting the temporary halt in shipments to the US.
- JLR’s sales have shown mixed results across regions, with North America seeing a 14.4% increase, Europe up 10.9%, and the UK showing flat growth at 0.8%.
- On the other hand, China recorded a sharp decline of -29.4% in wholesales, and overseas markets saw a -8.1% drop.
- These regional variances highlight the challenges JLR faces, especially in key markets like China and the US.
Analysts’ Perspective on Tata Motors’ Future
Market analysts have had mixed reactions to Tata Motors’ stock.
- Kranthi Bathini, Director of Equity Strategy at WealthMills Securities, expressed a cautiously optimistic outlook, emphasizing the importance of how Tata Motors addresses the US tariffs and the decline in JLR sales in China.
- Tata Motors derives about 67% of its revenue from JLR, and JLR depends on China for 27% of its volumes.
- The analyst suggests tracking developments in JLR’s response to tariff pressures and market performance.
On the other hand, Sharad Avasthi, Head of Research at SMIFS, recommended bottom fishing for investors looking to capitalize on the stock’s current correction.
- Avasthi believes Tata Motors could offer a target price of Rs 1,000, even if it trades at 11-12x its earnings multiple.
- While acknowledging potential hiccups in the near term, he sees long-term potential in the stock.
Conclusion
Tata Motors faces significant challenges, particularly from the US tariffs and the decline in JLR sales in China.
- However, analysts remain divided, with some cautiously optimistic about the stock’s potential, while others suggest bottom fishing for long-term gains.
- Investors will need to closely monitor Tata Motors’ response to these headwinds, particularly in the US and Chinese markets, to gauge the stock’s future direction.
- As of December 2024, promoters hold 42.58% of the company’s equity.