Shares of Tata Motors Passenger Vehicles dropped 6% in Friday’s trade, August 14, falling to around the ₹329 level, as the Street was disappointed with the company’s June-quarter performance.
Net profit plunged 80% year-on-year, as continued challenges at its UK-based luxury unit JLR, coupled with elevated raw material costs, weighed on profitability during the quarter. Analysts also expect the weakness to persist, putting further pressure on the stock and dragging it to its lowest level in nearly two weeks.
Motilal Oswal retained its ‘Sell’ rating on Tata Motors PV with an unchanged SoTP-based target price of ₹310 per share, while refraining from making any material changes to its FY28 estimates at this stage.
The brokerage said the company continues to face multiple headwinds, with the India business gaining market share but margins remaining under pressure due to an adverse product mix and rising input costs. Meanwhile, JLR continues to face challenges on both the demand and cost fronts.
Although JLR has embarked on a major cost-reduction initiative, Motilal Oswal expects the measures to only partially offset the ongoing headwinds. Given the significant challenges at JLR and continued geopolitical uncertainty, the brokerage remains cautious on the stock.
Meanwhile, JM Financial retained its ‘Add’ rating on Tata Motors PV with an unchanged SoTP-based target price of ₹375 per share, valuing JLR at 3x EV/EBIT and the standalone business at 11x EV/EBITDA.
The brokerage also highlighted the ongoing challenges faced by the JLR unit, stating that China remains a challenging market, while continued disruptions in the Middle East are likely to weigh on JLR’s performance.
The company’s pivot towards North America as a key strategic focus, along with upcoming launches such as the Range Rover EV, Range Rover Sport EV, Range Rover GT, and Jaguar Type 01.
Following the Q1 FY27 performance, JM Financial has raised its estimate for domestic PV volume growth to around 16.5% for FY27E, from 12.3% earlier. However, it has cut its FY27E EBITDA margin estimate for the domestic PV business to 6.8% from 8.3% earlier, reflecting the pressure on profitability.
The brokerage, however, has not made any changes to its JLR estimates.
Q1 net profit drops to ₹775 crore
The company on Thursday reported a consolidated net profit of ₹775 crore, an 80% decline from ₹3,924 crore in the same period last year. Sequentially, net profit also remained lower, falling from ₹5,783 crore in the March quarter.
Revenue from operations during the reporting quarter stood at ₹94,827 crore, up 9% from ₹87,141 crore in the year-ago period. Meanwhile, Jaguar Land Rover (JLR) reported a 9.2% decline in wholesale volumes in the first quarter, impacted by temporary supply constraints, including a fire at a major component supplier at the beginning of the quarter.
The business, which accounts for around two-thirds of Tata Motors’ overall revenue, also faced market disruptions linked to the conflict in the Middle East, along with the planned wind-down of outgoing Jaguar models ahead of the launch of the Jaguar Type 01.
In contrast, the company’s domestic business remained strong, with volumes rising 46% year-on-year, while EV volumes surged 112% YoY, supported by its comprehensive electric vehicle portfolio, new launches, and improving demand following the easing of disruptions related to the West Asia conflict.
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