CLSA has downgraded Tata Motors from ‘High Conviction Outperform’ to a standard ‘Outperform’ rating, while lowering its target price to ₹765 per share from ₹930 earlier. The revised target implies a potential upside of 17% from the current market price of ₹655.55.
The downgrade follows concerns over the impact of proposed 25% US tariffs and Jaguar model rationalisation, which could reduce Jaguar Land Rover (JLR) volumes by 14% YoY in FY26. As a result, CLSA has trimmed JLR’s FY26 EBITDA estimate by 15% and expects EBIT margins to decline to 7% in FY26/27 from 9% in FY25.
Despite the tariff overhang, CLSA notes that free cash flow at JLR remains positive. Additionally, it sees the commercial vehicle (CV) cycle bottoming out in FY26, with potential valuation benefits of ₹127 per share if CV valuations are rolled forward to FY28.
The brokerage has also adjusted JLR’s EV/EBITDA multiple to 2.0x (from 2.5x earlier), though it highlights that the market is currently pricing in a much lower multiple of just 1.1x, suggesting limited downside from here.
Disclaimer: This article is for informational purposes only. Investors are advised to consult certified financial advisors before making any investment decisions.
