UBS has downgraded Tata Motors to a “Sell” rating with a target price of ₹825, raising concerns about increasing discounts on Jaguar Land Rover’s (JLR) premium models. The sharp rise in discounts on the Range Rover Sport, one of JLR’s key models, has been flagged as a potential risk for investors.
JLR’s premium lineup—comprising the Defender, Range Rover, and Range Rover Sport—has contributed significantly to boosting the company’s average selling prices (ASPs) and gross margins. However, UBS points out that the extended successful run of these models is starting to moderate, with the order book now falling below pre-COVID levels. There is also a possibility that discounts on the Range Rover could increase soon, adding to the pressure on margins.
UBS warns that further downside risks may emerge from slippage in JLR’s margins, along with potential underperformance in Tata Motors’ Indian passenger vehicle (PV) business, especially in its electric vehicle (EV) division, due to the high valuations and competitive pressures.
Given these factors, UBS anticipates downside risks for Tata Motors, particularly in the event of significant shortfalls in performance across both its JLR and Indian PV segments.
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