Amid Demerger, Tata Motors Rated 'Underperform' With 15% Downside By Jefferies

Jefferies has maintained an 'underperform' rating on Tata Motors Ltd., setting a price target of Rs 570, which implies 15% downside from the stock's current levels, even as the automaker goes through its long-awaited demerger.

At an analyst meeting, Tata Motors said that the record date for the demerger, which is effective October 1, will tentatively take place around mid-October.

As part of the demerger plans, the existing stock will trade ex-commercial vehicles on the record date and will subsequently be renamed Tata Motors Passenger Vehicles Ltd, while the CV (demerged) entity will be Tata Motors Limited.

While Tata Motors expressed confidence in demand and margins for both the PV and the CV business, Jefferies flagged challenges in the company's Jaguar Land Over arm, especially following a recent cyberattack that disrupted production for nearly a month.

What is driving Jefferies particularly cautious is the lingering uncertainty around emission regulations and the Sierre SUV launch, now scheduled for 2026.

The brokerage firm further noted that India's CV demand outlook remains positive but was less than optimistic on the PV front, especially as far as the margin improvement is concerned.

Tata Motors, for its part, expects double-digit CV industry growth in the second half. They also upgraded the FY25-30 CV industry CAGR outlook to 6-8% from 5-7% earlier.

Tata Motors announced in July the deal to acquire Iveco Group, excluding its defence business, for 3.8 billion euros (nearly Rs 38,240 crore) in a deal which is set to be its single-biggest buyout.

However, Integration benefits from the Iveco acquisition also remains uncertain, Jefferies noted.

Nevertheless, the coming month will be an important one for Tata Motors as it looks to unlock value throughout separate listing of its CV and PV arm.