Tata Motors Share Price Declines; JPMorgan Slashes Target Price, Cites JLR Uncertainty And Margin Concerns
The brokerage has a cautious view on JLR which drives a Neutral rating for the scrip.
Tata Motors share price declined 0.33% on Friday at intraday after JPMorgan reduced the target price for the scrip from Rs 700 to Rs 385. The brokerage has a cautious view on JLR which drives a Neutral rating on the stock JPMorgan said.
It further added that, "our cautious view on JLR is driven by uncertainty around the ultimate impact of US tariffs and China luxury tax in FY27, and launch timeline and competitive positioning of its models beyond the top 3".
The brokerage also added that, the India PV business should benefit from improved market growth and model launches, but margin improvement is key to drive a re-rating.
“Our new price target is Rs 385 per share which implies a small downside and we rate the stock Neutral.” However it noted that, “we could get more constructive on the name if JLR's 2HFY26 performance gives confidence for a high-single digit EBIT margin in FY27 and if there is a revival in the mid-segment Land Rover SUVs due to the EMA platform and India PV is able to gain market share and drive EBIT margin towards mid-single digits”.
JPMorgan further said that JLR needs the new Jag and the smaller LR models to fire in FY27-28. The brokerage has cut FY26-28 volumes by 4-8% due to a combination of the recent cyber attack (short-term) as well as uncertainty around the EMA platform timelines. “We expect EBIT margin to improve from 2.5% in FY26 to 6.2% by FY28 - which would still be lower than FY25 (8.5%). We forecast negative FCF of GBP 1.2 billion in FY26 which should turn positive in FY27-28. We expect net debt to increase to GBP 1.4 billion by FY26 before turning to net cash (GBP 257m) by FY28".
