Jefferies has downgraded Tata Motors to ‘Underperform’, cutting its target price to ₹660, implying a 12.5% downside from the current market price of ₹754.80. This marks the brokerage’s first downgrade on the stock in 3.5 years.
The key reason for the downgrade is the weak Q3 FY25 performance, where EBITDA fell 16% YoY, missing Jefferies’ estimates by 19%. The brokerage highlighted weak demand for JLR (Jaguar Land Rover) in China and Europe, rising customer acquisition costs, and higher warranty expenses as major concerns impacting profitability.
In addition to JLR’s challenges, domestic commercial vehicle (CV) and passenger vehicle (PV) demand has slowed, while competition in the electric vehicle (EV) segment is intensifying. Despite an expected seasonally stronger Q4, Jefferies cut its FY25-27 EBITDA estimates by 7-11% and EPS forecasts by 5-10%, citing sustained headwinds across key segments.
Investors will be closely watching Tata Motors’ ability to navigate demand pressures, rising costs, and competition, particularly in the EV and luxury vehicle segments.
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