Tata Motors share price: The Tata Group-backed automobile giant, Tata Motors stock has plunged by nearly 3% on Thursday, moving closer to its 52-week low levels. The latest bearish trend emerged after Donald Trump's 25% tariff on imported auto products came into effect on April 3. Investors are concerned over the tariff's impact on Tata Motors' financial books as the auto giant delivers a significant chunk of JLR cars in the USA.
Tata Motors Share Price:
At the time of writing, Tata Motors' stock price traded at Rs 661.80 apiece, down by 1.5% on BSE, with a market cap of Rs 2,43,134.68 crore. In the early deals, the heavyweight auto stock plunged by at least 2.5% to hit an intraday low of Rs 655.20 apiece.
Compared to its intraday low, Tata Motors' share price is now just Rs 49 away from hitting its 52-week low of Rs 606.20. The stock is down by 44.4% from its 52-week high of Rs 1,179.05 apiece. As of April 3rd, Tata Motors price-to-equity is at 39.31x, while return on equity is at 20.24%, which is still healthy.
Why Tata Motors' share price is falling?
With effect from April 1, the US has imposed a 25% tariff on imports of automobiles and certain automobile parts. The move is to protect America's automobile industry, which is vital to national security and has been undermined by excessive imports threatening America's domestic industrial base and supply chains.
However, this move is a massive dagger to the growth of foreign cars such as BMW, Jaguar Land Rover, Toyota, and Honda among others whose production is significant in the US. They will have to pay 25% tariffs, which will likely push them to increase automobile prices. Other impacts could be low production, low demand and a decline in sales.
In its report, Anand Rathi said, "A significant component, involves a 25% tariff on imported automobiles, targeting vehicles manufactured in Europe, Japan, Korea, Mexico and Canada. This measure is designed to encourage foreign automakers to shift production to the United States."
However, Rathi's report believes that the 25% tariff on imported automobiles and parts could impact Indian manufacturers. It said, "This could lead to increased prices and reduced demand for Indian automotive products in the US."
On April 2nd, JLR said, "Our luxury brands have global appeal and our business is resilient, accustomed to changing market conditions. Our priorities now are delivering for our clients around the world and addressing these new US trading terms."
As per reports, it was known that JLR delivered some 99,277 vehicles in 2024, as per GoodCar BadCar data, which rose by 33.5% year-on-year. JLR's market share also rose to 0.62% from earlier 0.48% in 2023.
Another reason why Tata Motors' stock tumbled is its continues decline in sales. The company's sales in the domestic & international market for Q4 FY 2024-25 stood at 252,642 units, compared to 265,090 units during Q4 FY 2023-24.
In Q4FY25, the company's passenger vehicle sales stood at 146,999 units, down by 6% YoY. Also, its commercial vehicle sales dip by 3% YoY to 105,643 units.
Tata Motors Share Recommendation:
After the auto sales report, Motilal Oswal said, " In its press release, TTMT expressed confidence in maintaining growth momentum in FY26, despite headwinds. The company expects CV demand to rise, driven by higher fleet utilization, financial support from interest rate cuts, lower crude oil prices, and a renewed push for large-scale infrastructure projects," adding, " On the other hand, while AL volumes were flat YoY, TTMT CV volumes declined 5% YoY."
As per Trendlyne data, the consensus recommendation from 30 analysts for Tata Motors Ltd. is BUY. The average target price is Rs 848.23 apiece, hinting at over 28% potential upside in Tata Motors ahead.
Last month, after an analyst meeting, brokerage ICICI Securities said, "TTMT marks the stress in China's market as cyclical rather than structural. JLR has performed better than the industry with a relatively lesser decline. The US market is holding up well alongside some signs of recovery in the EU. The company expects to see strong growth continuing in the near term. Defender Octa, launched recently, has seen robust response, especially in markets like the Middle East. TTMT has a clear strategy on vehicle architecture, providing seamless transition to EVs. Depending on end-market response, the company shall accordingly work with ICE/EV offerings. TTMT remains confident of meeting its Q4FY25 JLR EBIT margin guidance of 10%, as highlighted in Q3. JLR's margins were impacted by higher VME and warranty costs. The company expects both these costs to start coming off during CY25. TTMT expects capex to continue in the GBP 3bn-3.5bn range and peak in FY25-26; it expects capex to be lower in FY27. The company is confident of being net debt-free even during FY26."
Apart from this, Tata Motors on the journey to split its business. The company's demerger will be of two separate listed companies housing A) the Commercial Vehicles business and its related investments in one entity and B) the Passenger Vehicles businesses including PV, EV, JLR, and its related investments in another entity. As part of the demerger plan, Tata Motors shareholders will get 1 share of TMLCV with a face value of Rs 2 each for every 1 share held in the company. This makes the business split ratio 1:1.
Disclaimer: The write-up is just for information purposes, and is not a recommendation to buy, sell or hold. We have not done fundamental or technical analysis and have no opinion on article mentioned. Neither, the author nor Greynium Information Technologies should be held liable for any losses. Please consult a professional advisor.
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