Shares of Tata Motors were down 4% at market opening on Friday, trading at ₹625. The stock is currently down 47% from its all-time high, reflecting investor concerns over global economic conditions and company-specific challenges.

This Intraday Falls comes after Tata Motors has received a downgrade from CLSA, with the brokerage firm revising its rating to "Outperform" and slashing the target price from ₹930 to ₹765. The downgrade comes amid concerns over U.S. tariffs and a decline in Jaguar Land Rover (JLR) volumes.

Key Reasons for Downgrade

1. Impact of U.S. Tariffs: The imposition of 25% U.S. tariffs and reductions in Jaguar model offerings are expected to cause a 14% year-on-year drop in JLR volumes by FY26. This will directly impact Tata Motors’ revenue from the high-end automotive segment.
2. Declining EBIT Margins: EBIT margins are projected to decline to 7% in FY26/27, compared to 9% in FY25, reflecting increasing cost pressures and lower revenue potential.
3. EBITDA Cut for JLR: The brokerage firm has also reduced JLR’s FY26 EBITDA estimates by 15%, although free cash flow (FCF) is expected to remain positive.
4. Lower Valuation Multiples: The EV/EBITDA multiple for JLR has been revised downward to 2.0x from 2.5x, with the market currently pricing in at an even lower 1.1x.
5. Commercial Vehicle (CV) Cycle Concerns: The CV cycle is anticipated to hit its bottom in FY26. However, rolling CV valuation to FY28 could add ₹127 per share, providing some long-term recovery potential.
6. Cushion Against U.S. Demand Risks: Tata Motors has implemented measures to mitigate demand risks in the U.S. due to tariff impositions, but uncertainties remain.

This downgrade reflects concerns about Tata Motors’ profitability and growth in the coming years. With trade restrictions and model cuts affecting JLR, investors may need to reassess their expectations for the stock. However, the company’s long-term outlook remains supported by a potential recovery in the commercial vehicle segment.

hile Tata Motors faces near-term challenges due to global trade policies and shifting demand patterns, its strategic adjustments may help cushion some risks. Investors should closely monitor the company’s financial performance and global trade developments before making investment decisions.

Disclaimer This article is for informational purposes only and does not constitute financial advice. Investors are advised to conduct their research and consult financial experts before making any investment decisions. Sensexnifty.com does not take responsibility for any financial losses incurred based on the information provided in this article.