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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