Tata Motors shares get a downgrade call from JPMorgan, stock reacts

JPMorgan has downgraded Tata Motors' stock from 'overweight' to 'neutral', citing new challenges facing the company's passenger and commercial vehicle segments. The brokerage also reduced the price target for Tata Motors to ₹740 from ₹1,250, aligning closely with the previous closing price. JPMorgan's note indicates that Tata Motors might become a net debt company again by the financial year 2026, which could prove challenging. Improvement is expected in 2027 and 2028, driven by tariff adjustments, new electric vehicle launches in JLR, and a recovery in India's commercial vehicle market.

Meanwhiile, shares of Tata Motors were trading marginally lower today. The stock fell 0.50% to Rs 706.55 in the current session against the previous close of Rs 710 on BSE. Market cap of the Tata Group firm fell to Rs 2.59 lakh crore. The stock has a one-year beta of 1.4, indicating very high volatility during the period

Meanwhile, the stock has slipped 40% from its 52 week high of Rs 1179.05 reached on July 30, 2024. In terms of technicals, Tata Motors stock is neither oversold nor overbought on charts, indicates its Relative Strength Index (RSI) of 53.5. A RSI value above 70 indicates a stock is overbought and below 30 denotes that it is oversold on charts.

The stock has seen very high volatility with its beta climbing to 1.4 in a year. 

Tata Motors' market share stabilisation and enhancing passenger vehicle margins in India are anticipated to aid in repairing its balance sheet, according to the global brokerage. Investors are keenly awaiting guidance from management during upcoming investor days scheduled for June 9 in India and June 16 for Jaguar Land Rover (JLR).

The brokerage highlights ongoing risks, including tariff pressures and an ageing JLR portfolio, coupled with market share challenges in India. Stabilisation of market share and enhancing margins will contribute to the balance sheet's repair. Investor attention remains focused on forthcoming management guidance. 

The firm announced a 51% fall in net profit to Rs 8,470 crore in Q4 against Rs 17,552 crore in the year ago period. Revenue climbed marginally to Rs 1,18, 927 crore in he last quarter against Rs 118300 crore in the year ago period. 

EBITDA climbed 0.6% to Rs 16,644 crore in Q4. The board of the firm announced a final dividend of Rs 6.00 per equity share.