Brokerages are signaling a cautious road ahead for Tata Motors as challenges weigh on its luxury arm Jaguar Land Rover and domestic passenger vehicle business, highlighting margin pressure, competitive headwinds, and modest growth expectations.
UBS retained a 'sell' rating, trimming its target price to Rs 780 from Rs 825 per share, implying a potential downside of 3%. The brokerage pointed out a hefty 50% drop in JLR's Ebit margins, primarily due to an 11% volume decline.
JLR's performance would have fared worse without €76 million in depreciation savings, UBS noted. Rising discount rates on JLR vehicles and increased competition in India's PV market are further points of concern, it said.
Nuvama retained a 'reduce' rating, with a sharp cut in its target price to Rs 767 from Rs 1,010 apiece, indicating a 4% downside. The report cited JLR's revenue miss and heightened discounting as key factors. It also slashed Ebitda forecasts for fiscals 2025 to 2027 by 10–20%, expecting a subdued revenue and Ebitda growth, now pegged at a compound annual growth rate of 0% and 4% respectively, over fiscals 2024 to 2027.
Emkay, meanwhile, maintained a more optimistic view with a 'buy' rating but still trimmed its target price to Rs 1,000 from Rs 1,175 per share. The firm highlighted a contraction in JLR's Ebitda margin, though it noted the brand is well-positioned in a challenging global market.
Emkay expects gradual improvement in JLR's performance in the second half, while noting that Tata's India CV business shows resilience despite muted infra spending and competition from railways.
Tata Motors Q2 FY25 Results Key Highlights (Consolidated, YoY)
Revenue down 3.5% at Rs 1.01 lakh crore (Estimate: Rs 1,03,005 crore).
Ebitda down 14.2% at Rs 11,736 crore (Estimate: Rs 14,636 crore).
Margin down 140 basis points at 11.6% (Estimate: 14.20%).
Net profit down 10% at Rs 3,450 crore (Estimate: Rs 4,805 crore).
One basis point is one-hundredth of a percentage point.
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