Posted on May 14, 2025, by Niftynews
Tata Motors shares fell by 3% during the morning trade on Wednesday, May 14, following the release of its disappointing Q4 FY25 results and dividend announcement. The decline in profit after tax and the challenging outlook for the company raised concerns among investors, despite an increase in sales for the quarter.
In this article, we’ll break down Tata Motors Q4 performance, the stock market reaction, and offer guidance on whether it’s time to buy, sell, or hold the stock.
📉 Tata Motors Q4 Results: A Profit Slump and Declining Margins
On May 13, Tata Motors reported a 51.34% year-on-year (YoY) decline in its consolidated net profit, which fell to ₹8,470 crore for the January-March 2025 quarter (Q4FY25). This marked a sharp contrast to the ₹17,407 crore profit the company reported in Q4FY24.
Despite the significant profit decline, the company’s quarterly sales stood at ₹1,19,502 crore, showing a marginal YoY growth of 0.4%. However, the earnings before interest, tax, depreciation, and amortisation (EBITDA) dropped 4.1% YoY, settling at ₹16,700 crore, and the EBITDA margin contracted by 60 basis points to 14%.
In FY25, Tata Motors reported a record revenue of ₹4,39,695 crore, showing a growth of 1.3% YoY. However, the company’s profit for FY25 dropped by 11.4% to ₹27,830 crore.
🛻 Challenges for Tata Motors in FY26: Expert Insights
Several challenges are affecting Tata Motors’ performance, especially in its Jaguar Land Rover (JLR) business and its domestic passenger vehicle (PV) market.
JLR’s Struggles:
Analysts at HSBC Securities and Capital Markets (India) noted that US tariffs and JLR’s aging portfolio are likely to constrain growth in FY26. This is expected to weigh down margins and slow growth for the company. The competitive landscape for JLR is becoming increasingly challenging, with rising customer acquisition costs and heightened competition in markets like China.
Slow Recovery in Commercial Vehicles (CV):
The commercial vehicle market continues to recover slowly, which is impacting Tata Motors’ overall performance in this segment. Despite a marginal YoY growth in sales, the CV cycle recovery remains slow, further pressuring the company’s profits.
💡 Stock Analyst Opinions: What Should Investors Do?
The market response to Tata Motors Q4 results has been negative, with analysts adjusting their outlook on the stock. Below are some key analyst recommendations:
- HSBC Securities downgraded Tata Motors to a ‘Hold’ rating from ‘Buy’, citing the potential difficulties in JLR’s growth and a slow recovery in the commercial vehicle market. The target price has been raised to ₹770 (from ₹700 previously).
- Jefferies India also downgraded Tata Motors to ‘Underperform’, noting that the company faces a tough year ahead. They reduced FY26-27 EBITDA estimates by 8%, but increased earnings per share (EPS) estimates by 3-4%. Their revised target price for Tata Motors is ₹630.
💰 Tata Motors Dividend Declaration: A Silver Lining?
Despite the disappointing results, Tata Motors declared a dividend alongside its Q4 earnings announcement. While the dividend may offer some comfort to investors, it does little to mask the declining profits and the challenges the company is currently facing.
🤔 Should You Buy, Hold, or Sell Tata Motors Shares?
Given the current market conditions and the 3% drop in Tata Motors share price, investors are left wondering if they should buy, hold, or sell the stock.
Buy:
If you’re a long-term investor, the stock might present an opportunity to buy at a lower price, particularly if you’re confident in the company’s future recovery. However, with the near-term challenges in JLR and the commercial vehicle market, it’s crucial to be cautious.
Hold:
For current investors, holding Tata Motors stock could be a sensible decision. The company is still generating record revenues, and the dividend declaration may appeal to those looking for passive income. However, the stock’s short-term outlook remains uncertain, so it’s advisable to closely monitor upcoming performance.
Sell:
If you’re looking to minimize risk or lock in profits, selling might be the right option. Given the 3% decline in share price and the ongoing issues in the JLR and CV segments, Tata Motors could face further volatility.
📣 Conclusion: Tata Motors Faces a Tough Road Ahead
Tata Motors Q4 results and annual performance have raised concerns about its growth prospects in FY26, especially due to challenges faced by its JLR business and sluggish recovery in the commercial vehicle market. While the dividend declaration provides some immediate relief, the decline in profit and margins could weigh on investor sentiment.
Whether you should buy, sell, or hold depends on your investment horizon and risk appetite. Long-term investors may want to consider holding the stock, while those looking for short-term gains or low-risk investments might consider selling.
