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.