Tata Motors shares tumble 9% on Jefferies downgrade

Shares of Tata Motors slipped 9% to hit a 52-week low in opening trade on Thursday after foreign brokerage Jefferies downgraded the stock to “underperform”, slashing its price target to ₹660 from ₹930 earlier.

The Jaguar Land Rover maker reported a 22% decline in net profit at ₹5,451 crore for the December quarter while its revenues rose 2.7% to ₹1.13 lakh crore.

The stock of Tata Motors plunged to ₹684.25 on the BSE against its previous closing price of ₹752.45.

Like other luxury carmakers, JLR witnessed a slowdown in China where car retailers are getting into financial stress. “We do see stress in China at an industry level. The premium market is down 14% year-on-year from April to December 2024 and if you look at the JLR’s import business, we are doing much better. We have declined 5% in that business,” PB Balaji, chief financial officer, Tata Motors, says in a media conference call. “So far the performance of JLR compared to the rest of the industry is much better. As the retailers’ financial situation improves, we should see China getting to growth in the coming quarters,” says Balaji.

Balaji expects JLR volumes to improve further in the fourth quarter, which is seasonally the strongest quarter, making JLR net debt-free. “We do see good volume uptake coming from the U.S., and the U.K. and the rest of the world. We are well hedged to manage the China risk by getting volumes from other places,” he says.

Tata Motors’ Balaji doesn’t expect U.S. President Donald Trump to impose tariffs on the U.K. “U.S. exports more to the U.K. than the other way round,” he says. JLR exports luxury cars from the UK to the US.

Revenues of Tata Motors’ domestic passenger vehicle business declined 4.3% year-on-year to ₹12,400 crore. EBITDA stood at 7.8%, up 120 basis points.

On the domestic side, Tata Motors expects a gradual improvement in demand on a combination of factors. “We believe infrastructure investments will continue this year. The festive season was good but thereafter demand has been weak. Demand will come back once the sentiment changes and once we are able to turbo-charge consumption. That is something we hope the Budget does. We expect Q4 to sequentially improve over Q3,” says Balaji.

Tata Motors’ consolidated earnings before interest tax depreciation and amortisation (EBITDA) stood at 13.7% in the third quarter, down 60 basis points year over year.

The company received PLI (production-linked incentive scheme) benefits of ₹351 crore in Q3 - for the past year aa well as for current year. It’s net automotive debt went down to ₹19,200 crore.

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