Analysts bet on Tata Motors post Q3: Will JLR pounce again?

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26 Aug, 2025 12:21

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Shares of Tata Motors slumped 6 percent intraday on Friday after its December quarter performance disappointed. The auto maker’s Q3 net profit fell 25.5 percent (year-on-year) to Rs 3581 crore dragged by domestic and Jaguar Land Rover sales.

However, analysts are not perturbed about the stock and are still betting on Tata Motors. JP Morgan reiterates overweight stance on it with a target price of Rs 595 per share. The brokerage feels JLR is in the midst of an aggressive product/capacity roll-out program while outlook for the India business is improving.

“JLR’s new initiatives are likely to be commissioned from Q4, which would impact margin over the near term, given the initial commissioning costs/changing model mix /higher S&D expenses/shifting production to the JV. This is likely to be offset by significant volume growth as  Discovery Sport, the XE and the F Pace arerolled out. The capex spend for FY15 is expected to be lower at £3-3.2 billion,” it says in a note.

Jefferies also maintains buy rating with a target price of Rs 659 per share as it is confident of JLR’s strong model momentum, hopeful of a turnaround in the domestic business and expects recovery in profitability along with volume recovery.

JLR also expects EBITDA margins to be lower in FY16 due to mix change, as a result of new models and accounting issues around new China JV. “We find the EBITDA guidance realistic and see no need to change our current forecasts. We expect near-term volume momentum to be strong due to new capacities (100k in UK, 130k in China) as well as new model launches, and maintain our volume estimates,” it says in a note.

However, it is cautious about weakness in margins of the domestic business.

Meanwhile, Barclays has slashed earnings by 10 percent for FY16 and for FY17. Despite the cut in earnings, it maintains overweight rating on the stock with a revised target price of Rs 729.

In Q3, JLR realisations were higher than expected but with new capacities coming on stream in the UK and China in Q4, volume growth is expected to remain upbeat, Barclays believes. JLR has guided for lower profitability due to ramp-up costs of new Chery JV and engine plant, adverse regional mix and product launch and marketing costs. JLR’s guidance of being free-cash neutral seems conservative since its annualised Q3 cash flow run-rate is enough to be free-cash neutral in FY16,” it explains.

At 10:40 hrs Tata Motors was quoting at Rs 554.00, down Rs 35.55, or 6.03 percent on the BSE.