Tata Motors’ stock plunged 8% after the company reported a 22.5% year-on-year (YoY) decline in net profit for Q3 FY25, missing analyst expectations. As of 9:16 AM, the stock was trading 7.70% lower at ₹692.70, reflecting investor concerns over weak earnings, margin pressures, and uncertain demand outlook in key markets like China and Europe.
The automaker’s net profit fell to ₹5,451 crore, down from ₹7,025 crore in the same quarter last year, despite revenue increasing 1.8% YoY to ₹1.13 lakh crore from ₹1.11 lakh crore in Q3 FY24. However, operating performance weakened, with EBITDA declining 15% YoY to ₹13,081 crore, compared to ₹15,333 crore last year. This was below market estimates of ₹15,980 crore. The EBITDA margin also slipped to 11.5% from 13.9% YoY, missing expectations of 13.7%.
JLR Performance and Margin Pressures
Tata Motors’ Jaguar Land Rover (JLR) segment, a key revenue driver, reported a 200 basis point (bps) decline in EBITDA margin to 14.2% YoY. However, EBIT margin improved by 20 bps to 9%. The management reiterated that JLR’s FY25 EBIT margin guidance remains at 8.5% or more, while Q4 margin is expected to be around 10%.
Despite Production-Linked Incentive (PLI) benefits, Tata Motors struggled to meet margin expectations, further dampening investor sentiment.
Stock Movement and 52-Week Performance
The stock opened at ₹709.00, but dropped to ₹683.20, marking a new 52-week low. It had previously reached a high of ₹1,179.00.
Brokerage Views
Several brokerages reacted to Tata Motors’ weak results with target price revisions and rating downgrades:
- Jefferies: Downgraded to ‘Underperform’, cut target to ₹660/sh from ₹1,000/sh, citing margin pressures and 7-11% reduction in FY25-27 EBITDA estimates.
- UBS: Maintained ‘Sell’, target at ₹760/sh, flagging ambitious Q4 targets amid uncertain FY26-27 demand outlook.
- Morgan Stanley (MS): Maintained ‘Equal-weight’, target at ₹853/sh.
- CLSA: Maintained ‘Outperform’, target at ₹930/sh, but cut JLR’s FY26 volume estimate by 5% due to weaker-than-expected demand in China and Europe.
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