Tata Group stock falls after US president announces 25% tariffs on non-US-made cars

The share of the leading automobile manufacturers plummeted up to 3 percent after 25 percent tariffs imposed on cars that are not manufactured in the US earlier by US President Donald Trump will come into effect today. 

Price movement 

With a market capitalization of Rs 2.42 lakh crore, the shares of Tata Motors Ltd were trading at Rs 658.95 per share, decreasing around 2 percent as compared to the previous closing price of Rs 671.80 apiece. 

Reason for fall 

Tata Motors Ltd shares declined as the 25 percent tariff on non-US-made cars, previously announced by President Donald Trump, takes effect today. The tariff impacts automakers exporting to the U.S., raising costs and affecting competitiveness, contributing to bearish sentiment around Tata Motors’ stock in the market. 

Additionally, the US remains a crucial market for Jaguar Land Rover, contributing 22 percent of its total sales in FY24. Nearly one-third of JLR’s 2024 sales came from North America, with the US being the primary driver. The company’s annual report highlights the region’s significant role in its overall performance. 

Brokerage target 

Recently, CLSA, one of the well-known brokerages globally, gave a ‘buy’ call on the automobile stock with a target price of Rs 930 apiece, indicating a potential upside of 41 percent from Thursday’s price of Rs 658 per share. 

Also read: Microcap stock aiming to double its revenue to ₹300 Cr to keep on your radar

Brokerage rational 

As per the CLSA, this is an attractive entry point despite near-term challenges. Jaguar Land Rover (JLR) trades at 1.2x FY27 EV/EBITDA, well below its normative 2.5x multiple. At the current stock price, JLR’s implied value is around Rs 320 per share, with a target valuation of Rs 450 in a sum-of-the-parts analysis. 

Furthermore, this helps mitigate risks like US tariff hikes and weaker demand or margins. CLSA also anticipates a cyclical recovery in the medium and heavy commercial vehicle segment from FY27, which could begin influencing valuations in the coming quarters. 

Meanwhile, in Q3 FY25, the company reported a 22% YoY drop in consolidated net profit to Rs 5,451 crore, missing estimates. Weaker margins and subdued Jaguar Land Rover (JLR) volumes impacted performance, despite sequential improvement. Revenue rose 2.7% YoY to Rs 1,13,575 crore, driven by modest sales growth. 

Additionally, the segment’s revenue fell 4.3% to Rs 12,354 crore, but the EBITDA margin improved by 120 bps to 7.8% due to cost-cutting and PLI incentives. Personal EV sales grew 19% YoY, while fleet sales declined following the expiry of FAME II subsidies, impacting overall performance. 

Segment Performance 

Tata Motors’ CV segment saw an 8.4% YoY revenue decline to ₹18,400 crore, but margins improved with cost-saving and PLI benefits. Trucks and buses gained market share, while PV sales hit record highs, boosting EV penetration to 24%. Strong SUV demand and festive sales drove growth. 

New development 

Tata Motors launched the all-new Sierra and Harrier EV at the Auto Expo, along with new BEVs and hydrogen ICE trucks. Its Fleet Edge platform now has 760,000+ active vehicles, while E-Dukaan and Fleet Verse grow rapidly. Sustainability efforts include Zero Waste certification and decarbonization initiatives. 

Management comments 

Management remains optimistic about a gradual rise in domestic demand, driven by infrastructure spending and new product launches. Meanwhile, JLR expects improved wholesales in Q4, dependent on retail growth, reflecting positive market trends and potential recovery in the automotive sector. 

Company Profile 

Tata Motors Group is a top worldwide automaker. As part of the legendary multinational corporation, the Tata Group, provides the globe with a diversified portfolio of automobiles, sports utility vehicles, trucks, buses, and defense vehicles. 

Written by Abhishek Singh

Disclaimer

The views and investment tips expressed by investment experts/broking houses/rating agencies on tradebrains.in are their own, and not that of the website or its management. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution while investing or trading in stocks. Dailyraven Technologies or the author are not liable for any losses caused as a result of the decision based on this article. Please consult your investment advisor before investing.

The post Tata Group stock falls after US president announces 25% tariffs on non-US-made cars appeared first on Trade Brains.