Tata Motors shares fall 4% after Q3 net profit drops 48% to Rs 705 crore: Should you buy, sell or hold?

Tata Motors share price

• Tata Motors shares drop 4% as Q3 net profit falls 48% YoY to Rs 705 crore.
• Exceptional costs of Rs 1,643 crore impacted earnings in Q3 FY26
• Brokerages gave mixed ratings; target prices range from Rs 431 to Rs 650

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The shares of Tata Motors, which now represent the company’s commercial vehicle business, dropped more than 4 percent on January 30 after the company reported a sharp fall in net profit for the third quarter of the financial year 2026.

The shares of the CV-maker plunged to Rs 450.55 apiece on Friday, snapping a two-session gaining streak.

Tata Motors Q3 Results:

Tata Motors on January 29 reported a consolidated net profit of Rs 705 crore for the third quarter of the financial year 2026. This marks a 48 percent year-on-year (YoY) fall from the Rs 1,355 crore net profit reported in the same period last year.

The earnings however were impacted by some exceptional losses. The firm incurred a one-time cost of Rs 962 crore to account for the stamp duty charges payable to various local authorities to effect transfer of registration of land acquired as part of the its demerger scheme.

Additionally, the company also incurred a one-time cost of Rs 603 crore due to the implementation of the new labour codes, which took effect last year, along with Rs 82 crore for acquisition.

Overall, the company incurred exceptional costs worth Rs 1,643 crore during the quarter.

The CV-maker’s revenue from operations meanwhile rose more than 16 percent YoY to Rs 21,847 crore during the quarter under review. Operating margin improved to 12.60 percent in Q3 FY26 from 12.07 percent in Q3 FY25, while profit margin reduced to 3.23 percent.

Tata Motors reported a 30 bps increase in consolidated EBITDA to 12.5 percent during the October-December quarter of the ongoing FY26.

Motilal Oswal on Tata Motors:

Motilal Oswal said that the firm’s Q3 results missed estimates, led by input cost pressures. The automaker’s Q3 profit was below the domestic brokerage’s expectations due to lower-than-expected margin at 12.8 percent.

“The key concern for TMCV has been its gradual loss of market share across key segments. Further, its recent acquisition of Iveco would expose it to the ongoing global macro uncertainties, thereby driving a potential de-rating, if demand does not improve anytime soon. We have already factored in a pickup in domestic CV demand in our estimates (we estimate 9% volume CAGR over FY25-28E). We also factor in margins to remain stable at 13% over FY25-28E,” Motilal said.

However, the brokerage added that the stock appears to be fairly valued now after a recent rally. It remained ‘Neutral’ on the stock, with a target price of Rs 431 apiece, which implies an upside potential of more than 8 percent from the stock’s previous closing price.

Emkay Global on Tata Motors:

Emkay Global said that the firm’s net profit beat its estimate mainly on account of lower-than-expected tax expense. “We believe the overall CV demand environment remains constructive, with double-digit growth likely to sustain till H1FY27 – TMCV should lead this multi-year upcycle in our view,” it said.

The firm retained its ‘Buy’ call on the stock, with a target price of Rs 650 apiece, which implies an upside potential of more than 38 percent from the stock’s previous closing price.

JM Financial on Tata Motors:

JM Financial said that rising commodity prices are expected to have impact on margins in Q4 FY26. “To partly offset this, the company has implemented a 1% price hike effective 1st Jan’26, while a potential moderation in discount intensity could provide additional support to the margins,” it said.

The brokerage kept a ‘Buy’ call on the stock, with a target price of Rs 550 apiece. This implies an upside potential of nearly 17 percent from the stock’s previous closing price.

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