All eyes are on the Tata Motors share price after the company announced its Q4 earnings on May 15. The stock is down over 2% in early trade. The management highlighted that “tariff and geopolitical situation’ are two key concerns for the company even as growth in Indian markets continues to be steady. The weak near-term outlook as well as the muted demand for JLR is adding to investor concerns. Brokerages as a result, have raised concerns about the overall profitability, and some have also cut the target price and rating on the stock.
Tata Motors: Focus on JLR volumes
The Tata Group has exposure across continent from Asia to America and JLR’s global performance is a key worry. That apart the CV volume growth in the domestic market is also expected to moderate going ahead. Some of the big worries with respect to JLR include “discontinuance of ‘Jaguar’ models, loss of market share in the China region and imposition of tariffs in US region.” Though P Balaji, Group Chief Financial Officer of Tata Motors indicated that they are awaiting “clarity on the US-UK trade agreement for final changes and whether it is applicable retrospectively,” most analysts are building in estimates based on expectation of volume contraction ahead.
Tata Motors: Muted CV outlook
The other big overhang for Tata Motors at the moment is the muted performance of the CV segment. Commercial vehicles have clocked reasonable utilisation levels with transporters. However, increasing competition from Railways and a high base indicate limited room for growth in the near-term. Although the company is focusing on cost savings, “a muted demand outlook and increasing marketing/sales promotion spends in the global and domestic market” may lead to low single-digit growth for the section going forward.
Nuvama on Tata Motors: Cut target price by 7%
Nuvama has cut the price target for Tata Motors to Rs 670 per share from Rs 720 and retained the ‘Reduce’ rating. The brokerage is “building in a muted revenue/EBITDA estimate of of 3% on a compounded basis for next two fiscals, FY26 and FY27. They also expect contraction in Jaguar volumes. According to Nuvama, “discontinuance of ‘Jaguar’ models, loss of market share in China and tariff implementation in US” are the primary challenges for Tata Motors. Moreover, they expect a “muted showing in CV division.” Nuvama is building in estimates of 2% growth on a compounded basis “on reasonable utilisation levels with transporters, increasing competition from Railways and a high base.”
Motilal Oswal on Tata Motors: Cut target price by 3%
Brokerage firm Motilal Oswal has maintained a ‘Neutral’ stance on Tata Motors, trimming its target price by 3% to Rs 690 slightly below the current market price of Rs 708 per share. According to the brokerage report, the company’s UK-based unit Jaguar Land Rover (JLR) is grappling with several challenges such as “tariff-led uncertainty for exports to the US,” weak demand in key markets like Europe and China, and “rising VME, warranty and emission costs.” Due to these headwinds, JLR’s management has not provided any financial guidance for FY26 and beyond, and Motilal Oswal expects a 100 basis points decline in margins between FY25 and FY27. “We expect margin pressure to persist for JLR,” the brokerage noted.
Back home, the outlook is not too bright either. As per the report, demand in both Commercial Vehicle (CV) and Passenger Vehicle (PV) segments in India is also moderating. Taking into account the global and domestic pressures, the brokerage has cut Tata Motors’ earnings estimates by 12% for FY26 and 5% for FY27. With no major positive triggers in sight, Motilal Oswal reiterated its Neutral rating and said, “For the lack of any triggers, we reiterate Neutral with FY27E SOTP-based TP of Rs 690.”