Shares of Tata Motors Ltd (NSE:TAMO) fell as much as 6.2% on Thursday as investors assessed the potential impact of former US President Donald Trump’s proposed 25% tariff on imported cars. The tariffs, set to take effect on April 2, are part of his broader trade policy, though it remains unclear whether they will apply to specific countries or all non-US automakers.
For Jaguar Land Rover (JLR), Tata Motors’ luxury car subsidiary, this could present a significant challenge. North America accounted for nearly one-third of JLR’s global sales in 2024, with the US alone contributing 22%, according to its annual report. Since JLR vehicles sold in the US are manufactured in the UK and other international locations, these higher tariffs could make them more expensive for American buyers, potentially dampening demand.
Analysts Remain Bullish on Tata Motors Despite Tariff Concerns
On March 12, several brokerages weighed in on the potential tariff impact, with a general consensus that JLR remains on track to meet its FY25 targets. Analysts expect volume growth in the coming quarters and believe that price hikes and cost efficiencies could help mitigate the tariff burden.
- Nomura reaffirmed its ‘Buy’ rating with a target price of INR 861, citing management’s confidence in JLR’s luxury expansion strategy and strong EBIT margin targets for FY25.
- Macquarie echoed a similar view, maintaining an ‘Outperform’ rating, citing JLR’s progress toward a net cash balance sheet by FY25 and improving margins in Tata Motors’ domestic commercial vehicle (CV) business.
- CLSA issued one of the most bullish calls, terming Tata Motors a ‘High Conviction Outperform’ with a target of INR 930, expressing strong confidence in JLR’s ability to meet financial commitments.
Is Tata Motors Undervalued? InvestingPro’s Fair Value Suggests Strong Upside
Despite the recent pullback, Tata Motors’ valuation remains compelling. InvestingPro’s Fair Value feature pegs the stock at INR 980.1 per share, representing a 46.1% upside from the current market price of INR 670.7.
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This fair value estimate is derived using multiple financial models, making it a highly precise and realistic valuation tool. Investors looking for data-driven insights can use InvestingPro to analyze valuations, track fair value estimates, and assess investment opportunities with clarity.
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