Tata Motors share: Jhunjhunwala, 66.25L retail investors gain despite price target cuts

Shares of Tata Motors, which has 66.25 lakh retail investors and Rekha Jhunjhunwala among shareholders, climbed 3 per cent in Monday's trade following the JLR owner's June quarter results. Auto analysts said margins for JLR and passenger vehicle (PV) segments missed estimates and are facing challenges, but the performance of commercial vehicle (CV) segment was ahead of their projections. The Tata group stock's valuations are not demanding but fair, they said.

"Demand risks from tariff impact could be there which are reflecting in the weakness in demand across key markets. China tariff absorption and higher incentives could impact margins as well. We lower JLR volume estimates by 2-3 per cent but factor in better mix also. We estimate EBIT margins for FY26F/27F at 6.2 per cent/7.6 per cent. We do expect a rebound of margins by FY27F as JLR raises prices to offset tariffs," Nomura said.

The foreign brokerage said Tata Motors' stock is currently trading at 4.6 times estimated FY27 EV/Ebitda, which is undemanding, but is fair considering the risks. It cut the Tata Motors target price to Rs 704 from Rs 799 earlier. 

ICICI Securities said JLR plans to effectively navigate the tariff-related challenges by driving demand, optimising geographical mix and cost efficiencies. It maintained its full-year guidance for FY26, targeting an EBIT margin of 5-7 per cent and expecting free cashflow of close to zero, the brokerage said.

"We expect Tata Motors’ (TTMT) domestic CV business to see a gradual pick up with an increase in government infra spending; domestic PV business may see revival supported by new launches. Maintain ADD with SoTP-based revised target of Rs 720 (earlier: Rs 775), implying 12x/2x FY27E India/JLR EV/Ebitda," ICICI Securities said.

Rekha Jhunjhunwala held 4,77,70,260 shares or 1.30 per cent stake in Tata Motors as of June 30. There were 66,25,734 small individual investors in Tata Motors at the end of Q1. On Monday, the stock rose 2.85 per cent to hit a high of Rs 651.35 apiece.

MOFSL said JLR is facing multiple headwinds, which include tariff-led uncertainty for exports to the US; demand weakness in key regions like Europe and China; and rising  VME, warranty and emission costs. 

"Given these factors, management has refrained  from giving any guidance for FY26 and beyond. Given the above headwinds, we  expect margin pressure to persist for JLR and have factored in 150bp margin decline  over FY25-27E. Even in India, both CV and PV businesses are seeing moderation in  demand. For lack of any triggers, we reiterate Neutral with June-27E SOTP-based target of Rs 631," it said.

Nuvama is building in a revenue and Ebitda CAGR of 5 per cent and 4 per cent over FY25–28E. For JLR, it expects muted volume growth (1 per cent CAGR) due to discontinuation of ‘Jaguar’ models, weak China/Europe sales and tariffs in US. 

"Moreover, we expect a muted showing in India CV (1 per cent CAGR) on a high base, reasonable utilisation for transporters and competition from Railways. Retain ‘REDUCE’ with a Sep-26E target price of Rs 610 (earlier Mar-26E Rs 670)," it said.