Tata Motors’ share price correction due to US tariffs, but strong financial turnaround keeps long-term prospects intact
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DANISH SIDDIQUI

Target: ₹800

CMP: ₹621.50

Tata Motor’s share price has corrected nealry 27 per cent in the last 3 months. This includes the 17 per cent drop since last week of March when the US announced 25 per cent tariffs on imports of autos/auto parts, exacerbating investor concerns on the prevailing weakness in China (North America is JLR’s largest market 32 per cent of FY25 wholesales).

Amid the noise around macros, we highlight that JLR’s implied FY27E EV/S at about 0.7x is near the historical lows of about 0.5x (seen in the FY16-21 phase of rising debt levels and Covid), even as the company has witnessed a strong, operational and financial turnaround (culminating in meeting the stated net-cash BS objective in FY25).

Even with bear case assumptions of a 25 per cent drop in US sales next year, the bigger Tata Motors’ financial health improvement story remains largely intact, net auto debt-to-equity at 0.24x in FY27E (bear case) vs 0.1x in FY25E; 1.1x in FY22.

We trim FY25E/26E/27E EPS by about 5-6 per cent to factor in some of the potential weakness (5 per cent drop in US sales, flat non-US sales). We retain Buy while cutting our TP (SoTP-based) to ₹800.

Published on April 17, 2025