The combined net profit result of Tata Motors dropped by 22.5% to ₹5,578 cr. During the same time last year. The company reported a net profit of ₹7,415 cr. JLR segments show impressive results the company’s performance was negatively impacted by the declining margins. The profit margin improved by 62% as the company posted a net profit of ₹3,450 cr within the proceeding September quarter.
Jefferies India Pvt Ltd, following its Q3 Results, announced that after maintaining a Buy rating for 3.5 years. They have now lowered Tata’s rating to Underperform. 3Q Earnings prior to Interest, Tax, Depreciation, and Amortization (EBITDA) decreased by 16% compared to the previous year and was 19% lower than Jefferies projections. Jaguar Land Rover (JLR) is experiencing low demand in China and Europe. That also increases costs for acquiring customers and elevates expenses for warranties. India’s Commercial and Passenger Vehicles have also decelerated, while competition in Electric Vehicles is increasing. Although Jefferies anticipates an improved Q4 seasonally. It has reduced its FY25-27 projected EBITDA by 7-11% and Earnings Per Share by 5-10%. Consequently, they have reduced their price target to ₹660. MM, EIM, and TVSL are their top Picks in the automotive sector.
Although management has kept its projections for JLR for FY25. Motilal Oswal Financial Services thinks that the target of a 10.2% Earnings before Interest and Tax (EBIT) margin for 4QFY25 is difficult to meet, considering the present unfavorable macroeconomic conditions. They anticipate continued margin pressure at JLR throughout FY24-27 due to: 1) low demand in important markets, 2). That is increasing cost pressures from investments in demand stimulation, and 3) the ramp-up of EV production, which is expected to dilute margins.
According to MOFSL, even in India, both the Commercial Vehicles and Passenger Vehicles sectors are experiencing a slowdown in demand. MOFSL has reduced its EBITDA forecasts for Tata Motors by 3% and 5% for FY25 and FY26 to account for struggles in the JLR segment. Due to a lack of any catalysts, they maintain a Neutral rating with a SoTP-based Target Price of ₹755 estimated for December ’26.
