Tata Motors’ stock fell 4% on Thursday after CLSA downgraded its rating from ‘High Conviction Outperform’ to ‘Outperform’ and slashed the target price to ₹765 from ₹930.
The downgrade stems from concerns over a proposed 25% US tariff and Jaguar model rationalization, which could lead to a 14% YoY drop in Jaguar Land Rover (JLR) volumes by FY26. CLSA has accordingly cut JLR’s FY26 EBITDA estimate by 15% and anticipates EBIT margins to decline to 7% in FY26/27 from 9% in FY25.
Despite these concerns, CLSA notes that JLR’s free cash flow remains positive. Additionally, the brokerage sees the commercial vehicle (CV) cycle bottoming out in FY26, with potential valuation benefits of ₹127 per share if CV valuations extend to FY28.
Furthermore, CLSA has revised JLR’s EV/EBITDA multiple to 2.0x from 2.5x, though the market is currently factoring in a lower multiple of 1.1x, indicating limited downside risk.
Tata Motors’ shares opened at ₹650.00, reaching the same as the day’s high, while the low stood at ₹625.25. Its 52-week high is ₹1,179.00, with a low of ₹606.30.
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