Tata Motors share price extends losses, down 3% as UBS keeps 'sell'

Tata Motors shares have been reeling under pressure for a while now, plunging 11 percent in just one month.

Shares of Tata Motors Limited were off to a weak start on the bourses, slipping 3 percent to Rs 901, extending losses for the second session in a row after UBS maintained its 'sell' recommendation on the counter citing weak prospects for the major.

With a price target of Rs 825, the international brokerage implies a downside potential of 11 percent from the previous close of Rs 927. Tata Motors shares have been reeling under pressure for a while now, plunging 11 percent in just one month.

Follow our LIVE blog for all the latest market updates

The brokerage notes that China is no longer a fast-growing market for global carmakers, and while premium cars might show some resilience, market share losses are likely to continue. UBS also highlights the need for global carmakers to rationalize capacities, adjust their product mix, and collaborate with local players.

In a previous report, UBS suggested that Jaguar Land Rover's premium models, including the Defender, Range Rover, and Range Rover Sport, have driven up average selling prices (ASPs), but demand for these vehicles is starting to wane.

The order book has now dipped below pre-pandemic levels, and discounts on Range Rovers may rise soon. The brokerage also anticipates downside risks from potential margin slippage at JLR, as well as in Tata Motors' Indian passenger vehicle segment.

For the June quarter, JLR reported a 5.4 percent rise in revenue at £7.3 billion. JLR's operating margin, calculated as earnings before interest and taxes (EBIT) rose 30 basis points to 8.9 percent for the quarter, driven by favourable volume, mix and material cost improvements. For the JLR segment, the company had said that it is expecting to witness constrained production in the second and third quarters due to annual plant shutdown and floods at a key aluminium supplier.

At about 9:20 am, shares of the company were trading at Rs 903, lower by 2.6 percent from the last close on the NSE.