Auto major Tata Motors Ltd.'s shares were the worst performers on the Nifty 50 index in trade on April 7, after the auto player announced its key subsidiary Jaguar Land Rover (JLR) would pause shipments to the U.S. in April in the wake of President Trump’s tariffs.
At close, shares of Tata Motors were quoting Rs 581.1 on the NSE, down 5.3 percent compared to the previous session's closing price.
The UK-based auto player stated that exports to U.S. will be halted, as the firm assess strategies for figuring out the 25 percent tariff on imported cars.
Given the tariffs, international brokerage CLSA cut its rating on Tata Motors shares on April 4 to 'outperform', down from 'high-conviction outperform' earlier. The target price on Tata Group player was cut to Rs 765 per share, down from Rs 930 apiece earlier.
The downgrade comes amid concerns over 25 percent U.S. tariffs on all auto imports, which could lead to a 14 percent year-on-year drop in JLR volumes by FY26. Tata Motors is expected to see a significant hit from the tariffs, as subsidiary Jaguar Land Rover (JLR) has deep exposure to the American market.
JLR sold over 4 lakh units globally in FY24, of which about 23 percent were sold in US alone. CLSA expects JLR’s EBIT margin to fall to 7 percent in FY26/27, down from 9 percent in FY25. While JLR’s FY26 EBITDA estimate has been cut by 15 percent, free cash flow is expected to remain positive.
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"The US alone contributed over a fifth of JLR's total revenue last year, making it a crucial market. With limited options to maintain margins and meet prior guidance, JLR will likely resort to price hikes and cost efficiencies. However, these strategies won’t yield immediate results, and a near-term hit to both revenue and profitability is expected," said Nirav Karkera, Head of Research at Fisdom.
Tata Motors shares have been under pressure over the past year, eroding 40 percent in value. In comparison, the Nifty 50 index has gained around one percent during the same time period.
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