Tata Motors PV shares dive 6% to hit 1-year low; here's why

Shares of Tata Motors Passenger Vehicles Ltd slumped 5.65 per cent in Friday's trade to hit a one-year low of Rs 301.10. The sharp decline follows news reports that the carmaker's luxury arm Jaguar Land Rover (JLR) has suspended production at a UK plant for up to two weeks due to a supplier-related issue.

With that being said, Kotak Institutional Equities remains constructive on the company's growth outlook, driven by new product launches. "TMPV expects domestic PV industry volumes to grow 8-9 per cent year-on-year (YoY) in FY2027E. The company expects to outpace industry growth and has guided for mid-teen volume growth," Kotak noted.

"While the current EBIT margins remain low, the company's long-term aspiration is to reach double-digit EBITDA margins, with 7 per cent as a near-term milestone. Cost reduction is a major focus, as RM costs currently lag behind industry peers by 5-6 per cent. Cumulative commodity cost hikes have compressed margins over the past few quarters. To offset these costs, the company plans to implement product-specific price increases and rein in the elevated discount levels seen throughout 2025. Margins will be improved through value engineering and increasing overall monthly production from 45k to a projected 60k units in FY2027E," Kotak also said.

"The company is exploring entries into the MPV and rugged SUV segments, where it currently lacks a presence. Upcoming launches include the Sierra EV, Avinya EV and 3-4 other new nameplates. EVs currently make up >15% of the company's portfolio mix. To alleviate consumer concerns regarding battery life and resale value, newer EV models such as the Punch EV include unlimited battery warranties," it further stated.

On JLR demand trends, Kotak highlighted, "The company expects Q4 FY26E wholesales to be in the range of 80-100k units as the production have normalised from November. However, the demand trends remain muted, especially in China and the US. To protect market share in China, JLR has absorbed recent luxury tax hikes rather than passing those costs on to buyers.

"The company plans on launching RR Electric during the year and other upcoming 2026 launches include the Freelander in China (with plans for expansion to other geographies following that), a new Jaguar electric model and Range Rover plate with EMA platform."