Tata Motors Q1 Review: Jefferies Cuts Target Price; Macquarie, CLSA Remain Bullish

Brokerages remain divided on the target price for Tata Motors Ltd. post its first quarter results for fiscal 2025-2026. Jefferies has maintained its 'underperform' rating with a target price cut to Rs 550 from Rs 600, Macquarie has maintained its 'outperform' rating with target price of Rs 753, while CLSA has maintained its 'outperform' rating with a target price of Rs 805.

Jefferies noted that Tata Motors had a big miss in Q1 amid rising headwinds and the company's Ebitda fell to a 10-quarter low. "Tata Motors stock has lagged Nifty 50 by 21% since Jan and we retain underperform with a revised price target," it added.

The brokerage has cut FY26-28E EPS by 8-15% on lower volumes and margins for JLR and India PVS. "We expect 19% EPS decline in FY26E followed by just 8% CAGR over FY26-289E. Our FY27-28 EPS estimates are 12-21% below Street," it added.

The brokerage sees multiple challenges across business, and is unconvinced about the Iveco acquisition. "JLR is facing increased competition and consumption tax in China, higher warranty costs and BEV transition and key models are starting to age," it added.

In India, passenger vehicle market share is slipping and margin is under pressure, while commercial vehicle demand is weak. "In PVs, we recently cut our FY25-28E industry volume CAGR from 8 to 6%. Tata Motors PV market share, after rising sharply over FY20-23, has slipped 1.2 ppt to 12.8% in Q1FY26. PV margin has weakened too, with low visibility of improvement," the brokerage added.

Macquarie highlighted that Tata Motors saw a muted quarter in a challenging macro climate. "Though the company saw strong CV margin, but PV disappointed," it added.

The brokerage maintains its outperform rating, as it believes that it is factoring in tariff-related earnings risk. "However, we believe near-term upside is capped due to JLR demand uncertainty in the current macro environment," it added.

The brokerage believes near-term upside is capped due to JLR demand uncertainty in the current macro environment. It sees risk from a potential demand slowdown and a levy of 10% luxury tax in China, which will largely impact the complete JLR portfolio.

Macquarie noted that it prefers M&M and TVS in India auto.

CLSA noted that Tata Motors is going through tough times. "The margins for JLR and CV were better than expected, while PV was lower," it added.

The brokerage is cautious on JLR volume growth for FY26 and build a 9% year-on-year volume decline with 5.5% Ebit margin.

CLSA maintains outperform rating as it rolls forward by a quarter to Sep-27 and increase their implied EV/Ebitda multiple for the CV business from 10 times to 12 times, in line with Ashok Leyland's upcycle multiple, as the brokerage believes a CV upcycle is around the corner.

The brokerage has lowered FY26/27 CL EPS by 10-17% on back of lowering its JLR volume estimate by 4-6% due to softer demand stemming from the tough macro-economic situation.