Month: February 2025

Shares of passenger and commercial vehicles manufacturer Tata Motors Ltd., also the parent company of Jaguar Land Rover (JLR) ended at a 52-week low on Friday, February 28, after the stock fell for the fifth day in a row.

With Friday’s fall, the stock has declined in seven out of the last eight trading sessions.

Tata Motors shares have now corrected 47% from their peak of ₹1,179, which they had hit on July 30 last year, and have lost nearly ₹2 lakh crore in market capitalisation since then.

The stock is also down close to 13.5% in the month of February, which will mark its seventh consecutive negative monthly return and its worst month since October last year, when the stock had declined 14%.

This is also the worst monthly losing streak for Tata Motors since 2015, when the stock fell between March and September that year, before rebounding in October and November.

On the charts, Tata Motors trades below all of its key moving averages, which is the 50, 100 and the 200-DMA. Its RSI is now at 28, which means the stock is in “oversold” territory. An RSI reading below 30 means the stock is “oversold.”

Tata Motors shares were the best performers on the Nifty 50 index in 2023, and also the only one who doubled in value on the index that year.

Despite this steep fall in share price, three out of the 34 analysts who have coverage on Tata Motors still expect the stock to cross levels of ₹1,000 and above.

Haitong Securities has the highest price target on the street for Tata Motors, which is at ₹1,300 and implies that the stock may almost double from current levels. Domestic brokerages like Axis Capital and Reliance Securities also have price targets of ₹1,100 each on the stock.

20 out of the 34 analysts who have coverage on Tata Motors have a “buy” rating on the stock, nine of them say “hold”, while five have a “sell” rating.

Consensus estimates of price targets imply a potential upside of 32% for the stock. Jefferies has the lowest target on Tata Motors at ₹625.

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Sudarshan Kamath, founder of Smallest AI, has generated interest on social media by announcing an unconventional hiring approach for a software engineer position at his Bengaluru office. Mr Kamath stated that candidates’ educational background and resumes are not required for the role, which offers a salary of Rs 40 lakh per annum and a five-day office workweek. The position is open to individuals with zero to two years of experience and will be based in Indiranagar.

 “We are looking to hire a cracked full-stack engineer at Smallest AI… Send a small 100-word text introducing yourself + links to your best work to info@smallest.ai” he wrote on X. 

The term “cracked full-stack engineer” isn’t a formally defined title in the tech industry, but it’s often used colloquially—especially in informal contexts like social media or job postings—to describe a highly skilled, adaptable, and resourceful software engineer who excels at both front-end and back-end development. The word “cracked” here likely draws from slang meaning “exceptional” or “outstanding,” suggesting someone who’s not just competent but stands out due to their problem-solving abilities, creativity, or efficiency.

Many users praised Mr Kamath’s focus on skills over credentials, while others debated the offered salary, suggesting it may be insufficient for a highly skilled “cracked” engineer. 

One user wrote, “Don’t add “cracked” if you can’t pay cracked salary. respectfully, it’s not a good look for you and your company.” Another commented, “Indira Nagar is such an expensive place that out of 15 lacs where in hand will be 1 lac approx, 35k will go just in accommodation in a sharing apartment plus groceries plus weekends plus education loan EMI or discretionary spending EMI. Feel yourself lucky if you can save 20k.”

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 The Central Board of Trustees (CBT) of the Employees’ Provident Fund Organisation (EPFO) Friday recommended retaining the interest rate at 8.25 per cent for financial year 2024-25 — the same level as previous year. It has over 30 crore total subscribers, out of which around 7.4 crore are active contributing subscribers, sources said. A formal announcement on the same is expected later in the day.

The EPFO’s Board had last year hiked the interest rate to the highest level in three years ahead of the Lok Sabha elections and has now retained it despite an overall rate cut cycle in the economy.

This comes at a time when the Reserve Bank of India (RBI) had cut the repo rate to 6.25 per cent after holding it at 6.5 per cent for two years on February 7. Before FY24, the EPFO has maintained the interest rate at 8.5 per cent both in 2019-20 and 2020-21, the EPFO had cut the interest rate in 2021-22 to 8.1 per cent, the lowest in four decades. It then hiked it marginally to 8.15 per cent in 2022-23.

The Ministry of Labour and Employment will now send the interest rate recommendation of 8.25 per cent for 2024-25 to the Ministry of Finance for ratification. After the ministry’s consent to the interest rate, the EPFO would credit the rate of interest for the previous fiscal to the EPF subscribers.

Here’s a look at the interest rates over the years:

Year	EPFO Interest Rate
2010-11	9.50%
2011-12	8.25%
2012-13	8.50%
2013-14	8.75%
2014-15	8.75%
2015-16	8.80%
2016-17	8.65%
2017-18	8.55%
2018-19	8.65%
2019-20	8.50%
2020-21	8.50%
2021-22	8.10%
2022-23	8.15%
2023-24	8.25%
2024-25*	8.25%

*as recommended by CBT, to be approved by Finance Ministry

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Tata Motors has become the worst-performing stock in the Nifty 50, with its shares dropping 44% from a high of Rs 1,179 in July 2024 to the current price of Rs 661.75, wiping out Rs 1.9 lakh crore in market capitalization. This sharp decline is attributed to sluggish demand for Jaguar Land Rover (JLR) in key markets like China and the UK, coupled with concerns over potential US import tariffs on European-made cars.

Domestically, weak sales in the medium and heavy commercial vehicle (M&HCV) segment, along with growing competition in the passenger and electric vehicle (EV) markets, have further weighed down investor sentiment. With the stock continuing its downward trend, the big question remains: Is the worst behind, or is there more decline in store?

The stock has been under pressure due to the weak demand outlook for JLR in major markets, as well as lower expectations for Tata Motors’ heavy commercial and passenger vehicle sales for FY 2025-2026.

Adding to the pressure is the looming risk of US import tariffs on European-made vehicles, which would hit JLR’s sales in the US, a market that accounts for 25% of its retail sales.

The Threat from Tesla’s India Entry

Concerns are rising about Tesla’s imminent debut in India and its potential impact on local automakers like Tata Motors. However, leading brokerages believe that Tesla’s entry may not pose a major threat. Analysts at Nomura suggest that Tesla’s expected pricing of over Rs 4 lakh would limit direct competition with Indian EV manufacturers, including Tata Motors. While Tesla’s brand recognition and technology may attract some consumers, analysts remain confident that domestic automakers will continue to dominate the mass-market EV segment.

Should Investors Do Bottom Buying?

After the significant drop in share price, is it a good time to accumulate Tata Motors stock at these levels? Here’s what analysts are saying:

“Tata Motors is at levels last seen in September-October 2023, having retraced nearly 50% from its all-time highs. The stock has strong support around the Rs 630-Rs 640 range, which should hold. I recommend holding on to Tata Motors and possibly accumulating at lower levels. We can expect the stock to move towards Rs 850-Rs 900 levels over the next year and a half,” said Ashish Kyal of Waves Strategy Advisors.

Gaurang Shah of Geojit Financial Services points to the positive outlook for JLR production at Sanand, which could lead to lower model prices. He also highlights strong domestic sales for Tata Motors, particularly in the commercial vehicle business, and notes that the company plans to make its balance sheet debt-free. “From current levels, downside risk is extremely limited. Hold on to Tata Motors if you have a long-term investment horizon,” he added.

Recently, CLSA upgraded Tata Motors and added it to its list of high-conviction outperform stocks. The firm believes the current share price implies a valuation of Rs 200 per share for JLR, compared to their target of Rs 450, providing a cushion against the impact of potential US tariff hikes.

Among the 34 analysts covering Tata Motors, 20 have given it a “buy” rating, 9 have a “hold” rating, and 5 recommend a “sell.” The consensus price target suggests a potential upside of 25% for the stock.

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Shares of small-sized banks and non-banking financial companies (NBFCs) rallied on Thursday, February 27, after the Reserve Bank of India (RBI) eased risk weight norms to boost lending growth.

The central bank on Tuesday lowered the risk weights of loans given by banks to NBFCs to 100% from 125%. Lower risk weights mean banks will have to set aside less capital for loans given to NBFCs, resulting in a substantial release of capital for lending purposes. This would help in improving banks’ capital adequacy ratio (CAR).

Meanwhile, NBFCs will also benefit as banks would be able to extend more loans to these entities, helping them deal with their liquidity issues.

Reacting to the announcement, the NIFTY Bank and Financial Services indices emerged as the top sectoral gainers on Thursday. At 11:30 am, Bandhan Bank shares were trading 4.5% higher after rising over 8% intraday, AU Small Finance Bank was up 4%, IDFC First Bank Ltd gained 2% and IndusInd Bank rallied 0.9%.

Similarly, NBFCs like Shriram Finance shares rallied 4.5%. Cholamandalam Investment and Finance Co. Ltd was trading up 3.8%, Bajaj Finserv Ltd jumped 2.5% and Muthoot Finance Ltd gained 2%.

In a separate circular, RBI also announced that it has excluded microfinance loans from higher risk weights, which are currently applicable to consumer credit.

Bank risk weights for loans extended to microfinance companies will be 75% or 100%, depending on the loan’s nature, compared with 125% earlier. All these new risk weight norms come into effect from April 1, 2025.

What is risk weight and its significance?

In November 2023, RBI increased the risk weight of banks’ exposure to consumption loans, credit card loans, and loans given to NBFCs by 25% to 125% to address the sharp hike in unsecured lending.

Risk weight is essentially a number that determines the minimum amount of capital that a financial institution needs to hold to cover its credit risk. In case the borrower fails to repay the loan, the amount set aside as the risk weight helps the lender to deal with the loss of a particular asset and maintain financial stability.

Different kinds of loans are assigned different risk weights because they pose different levels of risk. Secured loans, like mortgage loans, carry lower risk weights because they are backed by collateral, while unsecured loans, like personal loans, carry higher risk weights.

The easing of risk weight requirements would help banks set aside lower capital to cover risk. This would free up some of their reserves and boost their capital adequacy ratio (CAR), which helps assess a bank’s financial health and ability to withstand economic downturns.

How will NBFCs, microfinance institutions going to benefit?

Lower risk weight on bank loans extended to NBFCs and microfinance institutions (MFIs) will encourage banks to lend more to these entities.

This is likely to improve credit flow to NBFCs and MFIs, which will further flow down as improved credit availability in the retail segment of the economy.

This development is especially significant for MFIs, as recent data showed that the gross loan portfolio in the microfinance segment shrunk by 3.5% year-on-year to ₹3.85 lakh crore during the December 2024 quarter due to curtailed funding. Sequentially, the sector’s loan portfolio declined from ₹4.08 lakh crore in the September 2024 quarter.

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