Tata Motors shares jump 3% despite drop in Q1 profit; here’s why

Shares of Tata Motors rallied over 3% in intraday trade on Monday, in sync with the broader market, even after the auto major reported weak earnings in the June quarter of the current fiscal. The Tata group stock was the top gainer in the Sensex pack as investors reacted positively to its first-quarter earnings report.

The shares of Tata Motors rose as much as 3.3% to ₹654.40 on the BSE, with its market capitalisation climbing to ₹2.4 lakh crore. Early today, the auto heavyweight opened a tad lower at ₹633.05 against the previous closing price of ₹633.30 on the BSE, but soon gained momentum, in line with recovery in the broader market.

The spurt in Tata Motors stock was driven by value buying after a recent correction amid concerns over the impact of U.S. tariffs on its overseas business. The stock had lost over 3% in the past three sessions after U.S. President Donald Trump imposed an additional 25% tariff on Indian goods, escalating trade tensions over India’s imports of Russian oil.

At the current level, Tata Motors shares are trading 43% lower than its 52-week high of ₹1,142 touched on August 29, 2024, while it rebounded 17% from its 52-week low of ₹542.55 hit on April 7, 2025.

Q1 profit drops 30%

For the June quarter of FY26, Tata Motors reported a net profit of ₹3,924 crore, down 30% year-on-year (YoY) from ₹5,643 crore in the year-ago period. The earnings were impacted by volume decline in all businesses and a drop in profitability, primarily at JLR, the company said in its earnings report released post-market hours on Friday.

The Tata Group company’s revenue also dropped 2.5% YoY to ₹1.04 lakh crore in Q1FY26, from ₹1.07 lakh crore in the year-ago period. On the operating front, earnings before interest, taxes, depreciation, and amortisation (Ebitda) declined 36% YoY to ₹9,700 crore, while margin dipped by 480 basis points (bps) to 9.2%.

Segment-wise, commercial vehicle (CV) revenues declined 4.7% to ₹17,000 crore, while Ebitda margins improved to 12.2% (+60 bps), benefitting from better realisations and cost savings despite lower volumes.

Meanwhile, passenger vehicle (PV) revenues declined by 8.2% to ₹10,887 crore, reflecting softness in industry demand and transition to new models. As a result, Ebitda at 4% dipped by 180 bps.

The earnings report showed that Tata Motors’ British subsidiary, Jaguar Land Rover (JLR), saw its revenues dropping by 9.2% to £6.6 billion, with Ebit margins falling by 490 bps to 4%, affected by the U.S. trade tariff impact. The company said the U.S. trade tariffs had a direct and material impact on profitability and cash flow in the period. However, the U.S.-U.K. trade deal will significantly reduce the financial impact of U.S. tariffs on JLR going forward, the release noted.

While the global demand outlook is challenging in the near term, Tata Motors expects a pick-up in domestic demand across segments.

Analyst views on Tata Motors Q1

Post Q1 results, Emkay Global said that over the past five years, JLR has strengthened its business (steady volumes, strong profitability) and balance sheet (net cash), making it well-placed to face near-term challenges. Its enterprise initiatives are expected to save £1.4 billion annually.

The brokerage has maintained a ‘BUY’ rating on Tata Motors, with a target price of ₹750 per share.

ICICI Securities has also maintained ‘ADD’ rating on the stock, with a revised price target of ₹720 from ₹775 estimated earlier. “We expect Tata Motors’ domestic CV business to see a gradual pick up with an increase in government infra spending; domestic PV business may see revival supported by new launches,” the brokerage said in a note.

Meanwhile, Motilal Oswal has reiterated a ‘Neutral’ rating with a price target of ₹631, citing a lack of any triggers. Given that JLR is facing multiple headwinds, the brokerage expects margin pressure to persist for JLR and has factored in a 150-bp margin decline over FY25-27E. Even in India, both CV and PV businesses are seeing moderation in demand, it added.

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