Posted on April 15, 2025, by Niftynews
Tata Motors shares surged over 5.5% on April 15, hitting an intraday high of ₹628.05 on the BSE, as bargain hunters moved in following a steep correction over recent months. The rally was supported by a fresh report from domestic brokerage Emkay Global, which reaffirmed a ‘Buy’ rating, citing deeply discounted valuations of Jaguar Land Rover (JLR) despite global macro pressures.
This sharp uptick in Tata Motors’ stock came after a significant decline—down 38% over the past year, including a 27% fall in just the last three months, with 17% wiped off since late March following tariff announcements from the United States.
📉 Recent Slump Triggered by US Tariff Shock
The stock has been under pressure due to global concerns, especially after the US imposed a 25% tariff on auto and auto parts imports, triggering fears of increased vehicle prices and a potential demand slowdown. These tariffs are particularly concerning for Tata Motors since North America accounted for 32% of JLR’s FY25 wholesales.
China’s ongoing economic slowdown has only added to the negative sentiment, putting Tata Motors in a double bind—two of JLR’s key markets facing turbulence simultaneously.
📊 Emkay: JLR Valuations Near Historic Lows
In its latest report, Emkay Global noted that JLR’s implied FY27E EV/Sales ratio of 0.7x is close to historical lows of 0.5x, which makes the stock an attractive buy despite the prevailing macro noise. According to the brokerage, Tata Motors has executed a strong operational and financial turnaround.
“Even under a bear case assumption of a 25% decline in US sales next year, Tata Motors’ financial recovery story remains compelling,” the brokerage said.
Emkay noted that even in a stressed scenario, Tata Motors’ net auto debt-to-equity would remain manageable at 0.24x by FY27, compared to 0.1x in FY25E and 1.1x in FY22. This showcases the company’s robust deleveraging and improved financial discipline over the past three years.
📉 EPS Estimates Trimmed, But Buy Rating Retained
While Emkay remains bullish, it has slightly reduced earnings estimates:
- 🔻 EPS for FY25/FY26/FY27 cut by 5–6%
- 📉 Reflects expected volume weakness in US and China
- 🎯 Target price reduced from ₹950 to ₹800 (SoTP-based)
Despite the cut, Emkay continues to see upside potential, suggesting that Tata Motors shares are undervalued at current levels.
📦 Stress Scenario: JLR Volumes Could Fall 18% in FY26
The brokerage has modeled a worst-case scenario with:
- 🚘 25% drop in North American volumes (FY26E)
- 🌏 15% drop across other key geographies
- 📉 Result: 18% YoY decline in JLR volumes in FY26E
This stress test also factors in reduced average selling prices (ASPs) and compressed margins. Yet, even under this pessimistic outlook, Emkay sees Tata Motors as fundamentally sound, with long-term value intact.
📈 Why Tata Motors Shares Are Attracting Attention Again
After a painful correction, Tata Motors shares appear to be drawing investor attention for several reasons:
- ✅ Valuations have become attractive relative to historic levels
- 🏭 Strong turnaround in core business and balance sheet strengthening
- 🚀 JLR’s premium positioning offers leverage if macro headwinds ease
- 📉 Negative news may already be priced in, offering rebound potential
Analysts also believe that much of the tariff-driven panic selling was overdone, and the company’s strong fundamentals and future product pipeline—including electrification—could offer a structural long-term growth opportunity.
✅ Conclusion: Is It Time to Buy Tata Motors Shares?
With JLR’s valuation nearing historic lows and Tata Motors showcasing a solid financial recovery, Tata Motors shares may be entering a value zone despite short-term macro pressures. Emkay Global’s endorsement, even with cautious revisions, signals investor confidence in the underlying strength of the business.
Investors with a medium-to-long-term view may find this an opportune time to revisit the stock, especially if global demand stabilizes and trade tensions ease.
