Tata Motors Q4 Results Review: Jefferies Hikes Target Price Even As Tough FY26 Expected

Jefferies hiked Tata Motors Ltd.'s target price after the company posted a smaller fall in its fourth quarter net profit, compared to estimates. The reason behind the smaller decrease is lower depreciation and interest expenses. The target price was hiked to Rs 630 from Rs 625, which implied 11% downside from Tuesday's close.

Jefferies maintained an 'underperform' rating on Tata Motors as it expects financial year 2026 is going to be tough for its flagship luxurious car brand Jaguar Land Rover. It cut Ebitda estimates for FY26 and FY27 by 8%, while it raised the earnings-per-share estimates by 6–7% for FY26 and FY27.

In the fourth quarter, Tata Motors enjoyed an enhanced free cash flow position because a large working capital was released. The automotive balance sheet turned from net debt of Rs 19,200 crore to net cash of Rs 1,000 crore, according to Jefferies.

"Jaguar Land Rover is likely to face a tough year ahead due to US tariffs, increasing competition in China, and rising customer acquisition cost. India CV demand has slowed down too, and competition is rising in electric PVs," Jefferies said in a note.

Tata Motors Q4 FY25 Highlights (Consolidated, YoY)

• Revenue up 0.4% to Rs 1,19,503 crore versus Rs 1,19,033 crore (Bloomberg estimate: 1,22,618 crore).

• Ebitda grew 0.6% to Rs 16,644 crore versus Rs 16,545 crore (Bloomberg estimate: 16,308 crore).

• Margin at 14% versus 13.9% (Bloomberg estimate: 13.1%).

• Net profit down 51.3% to Rs 8,470 crore versus Rs 17,407 crore (Bloomberg estimate: 7,662 crore).

JLR's lower margins drove a decline in the fourth quarter Ebitda, Jefferies said. Meanwhile, its depreciation fell 6% on the quarter, which overall boosted the consolidated EBIT.

Tata Motors' management did not provide any guidance for JLR because of the unfolding of tariff-related developments, as they're trying to find a mitigation strategy, according to Macquarie. In the near term, the brokerage expects a fall in JLR volume because dispatches to the US stopped in April. There's also an upside risk to the working capital.

New model launches in internal combustion engine and electric vehicle segments for passenger vehicles will be a key watch for investors in Macquarie's view. The brokerage will also monitor trends in variable marketing expense, which advanced 80 basis points on the quarter to 5%.

Macquarie maintained an 'outperform' rating on Tata Motors and target price of Rs 826 apiece, which implied 14.6% upside from Tuesday's closing price.