Tata Motors share price drops 6% after CLSA downgrade and JLR warning
Tata Motors share price sinks on CLSA downgrade
Shares of Tata Motors Ltd fell sharply Friday, shedding nearly 6% in intraday trading, after global brokerage CLSA downgraded the stock and removed it from its high-conviction "outperform" list.
The move comes amid rising concerns over U.S. import tariffs and slowing sales projections for the company’s Jaguar Land Rover (JLR) unit. Tata Motors stock declined 5.77% to close at ₹615.50 on the Bombay Stock Exchange, approaching its 52-week low of ₹606.20, recorded on March 3, reports Business Today.
The company’s market capitalization dropped to ₹2.26 lakh crore. Over the past year, the stock has lost 39% of its value, with a 34% decline in the last six months alone. Tata Motors’ one-year beta is 1.2, signaling heightened volatility compared to the broader market.
Tariffs, Model Cuts to Weigh on JLR Volumes
CLSA lowered its target price for Tata Motors to ₹765 from ₹930, projecting a 17% potential upside from Thursday’s close. The firm attributed the downgrade primarily to a combination of external and operational headwinds affecting JLR.
Tata Motors Ltd (TAMO) share price dynamics (Nov 2024 - Apr 2025) Source: TradingView
The U.S. recently imposed a 25% tariff on certain vehicle imports, which, along with the planned discontinuation of some Jaguar models, is expected to reduce JLR’s annual volumes by 14% in fiscal year 2026. The brokerage warned that this downturn could compress JLR’s EBIT margin to 7% in FY26–27, down from the 9% expected this year.
JLR’s estimated earnings before interest, taxes, depreciation and amortization (EBITDA) for FY26 were also revised downward. However, CLSA noted that Tata Motors is still expected to generate positive free cash flow in both FY26 and FY27.
CLSA further reduced JLR’s enterprise value-to-EBITDA (EV/EBITDA) multiple from 2.5x to 2x, reflecting near-term growth challenges. At present, JLR is trading at an EV/EBITDA ratio of 1.1x. The U.S. remains a critical market for JLR, accounting for 23% of the 400,000 units sold globally in FY24. Any decline in American sales could have a disproportionate impact on earnings and investor sentiment.
Additionally, Tata Consultancy Services (TCS) saw a sharp 3.5% drop in share prices on April 4, 2025, as global markets reacted to the United States’ newly announced import tariffs. While the Indian IT sector isn't directly targeted, analysts point to indirect consequences due to client dependence on U.S. markets.
