Jefferies downgraded Tata Motors from ‘buy’ to ‘underperform’

Jefferies downgraded Tata Motors from ‘buy’ to ‘underperform’ due to weak earnings and concerns over Jaguar Land Rover (JLR). Tata Motors’ Q3 FY25 profit fell 22% YoY to ₹5,451 crore, missing estimates. Revenue rose 3% YoY to ₹1.13 lakh crore, but EBITDA margins contracted by 60 basis points to 13.7%. The performance was impacted by lower volumes and higher costs, particularly in JLR. Despite the revenue growth, the margin pressure raised concerns over the company’s profitability.

Jefferies cited a cautious demand outlook, especially in China, and ongoing margin pressures as key reasons for the downgrade. The brokerage firm also slashed its price target for Tata Motors to ₹660, the lowest on the street, reflecting a more conservative view on the company’s near-term prospects. Additionally, Jefferies highlighted the need for Tata Motors to address supply chain issues and improve operational efficiencies to stabilize margins.

The downgrade comes at a time when Tata Motors is navigating a challenging market environment, with both domestic and international headwinds. The company is focusing on strategic initiatives to enhance its market position and drive long-term growth. However, the immediate outlook remains cautious as it works to overcome these challenges.