Domestic brokerage Emkay Global reiterated its buy call on auto giant Tata Motors, as valuations have turned attractive following a crash in the firm’s share price over the past three months.
However, the brokerage trimmed its target price on the firm to Rs 800 apiece, which indicates an upside of around 34 percent.
After the U.S. President Donald Trump imposed 25 percent tariffs on the auto sector, triggering the market sentiment. The announcement sparked fears among investors about a rise in costs and broader implications for economic activity in North America, which happens to be Tata Motors’ subsidiary Jaguar Land Rover’s (JLR) largest market, accounting for 32 percent of the estimated sales for the financial year 2025.
Tata Motors’ shares corrected about 27 percent over the last 3 months, around 17 percent of this tumble taking place since the tariff was announced.
Going ahead, Emkay Global sees weakness in JLR volumes: a five percent drop in US and China sales, flat non-US sales in FY26E, followed by flat total volumes in FY27E.
The brokerage added that there is a strong turnaround at Tata Motors, and JLR has been ignored in the market price. The current valuations for JLR are at historical lows, even as there has been strong improvement across financial/operational parameters over the past 5 years.
"This has been despite flattish volumes amid a strong focus on profitability and by leveraging the strength/image of its iconic brands, culminating into JLR's balance-sheet turning net cash positive in FY25, thus delivering a key stated objective, with strong improvements also seen in the India CV and PV businesses over the past few years," added Emkay.
Tata Motors, itself, has estimated softening volumes given the current market and is presently evaluating options with regards to the issue at hand. The U.S. development comes at a time when Chinese demand has also been under pressure, in response to the uncertainty, JLR has indicated it may temporarily pause shipments to the U.S. in April.
While current sentiments are dampened due to global macro pressures, particularly the U.S. tariff announcement, Tata Motors’ operational turnaround and improving balance sheet offer a strong foundation.
Disclaimer: The views and investment tips expressed by experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
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