Tata Motors shares plunge 47%, lose over ₹2 lakh crore in m-cap. Will the Nifty auto stock rebound anytime soon?

Tata Motors' stock has faced a significant downturn, declining over 47 per cent from its July 2024 peak of ₹1,179 to ₹621.10, as of March 3, 2025. The stock has endured a consistent downtrend over the last seven months, erasing over ₹2 lakh crore in market capitalisation. The decline is attributed to a weaker demand outlook for Jaguar Land Rover (JLR), challenges in the domestic passenger vehicle (PV) segment, and broader macroeconomic concerns.

Prolonged Losing Streak and Market Performance

Tata Motors was among the top-performing stocks in 2023, doubling in value and leading gains on the Nifty 50 index. However, its fortunes have reversed, making February the seventh consecutive month of decline. The over 13 per cent drop in February also marks its worst monthly performance since October 2024, when the stock declined by 14.4 per cent. This downturn represents the company's longest losing streak since 2015, when the stock fell for seven months before rebounding.

Meanwhile, in the last one year, it has shed over 37 per cent. The auto stock also hit its 5 2-week low of ₹606.20 in the previous session, March 3, 2025.

In the long term, over five years, the auto stock has soared 390 per cent.

Sales and Financial Performance Impacting Sentiment

The slump in Tata Motors' stock aligns with a weakening financial performance. The company's domestic sales fell 9 per cent year-on-year (YoY) in February, dropping to 46,435 units from 51,267 units in the same period last year. The electric vehicle (EV) segment witnessed a steeper decline of 23 percent YoY, reflecting competitive pressures and slowing demand in the segment.

In Q3 FY25, the company reported a 22 per cent YoY decline in net profit to ₹5,451 crore, impacted by lower margins and a slowdown in its JLR division. While revenue increased by 3 per cent YoY to ₹1.13 lakh crore, consolidated EBITDA came in at ₹15,500 crore, down 16 per cent YoY and 19 per cent below analysts' expectations.

Brokerages Turn Cautious on Tata Motors

Global brokerage Jefferies downgraded Tata Motors from "buy" to "underperform," slashing its price target to ₹660 from ₹930. The firm cited weak demand in China and Europe, rising customer acquisition costs, and higher warranty expenses at JLR. It also noted increasing competition in the EV market and a slowing demand trend in India’s commercial and passenger vehicle segments. Jefferies revised its FY25-27 EBITDA and EPS estimates downward by 7-11 percent and 5-10 percent, respectively.

Similarly, Nuvama Institutional Equities reduced its target price to ₹720 from ₹750 while maintaining a 'reduce' rating. The firm expects muted revenue and EBITDA growth over FY25-27, citing order book exhaustion at JLR, discontinuation of Jaguar models, and subdued demand across key regions. Nuvama also anticipates a weak performance in the commercial vehicle (CV) segment due to moderate road construction spending and a high base effect.

Technical Analysis: Signs of Stability at Key Support Levels

Om Mehra, Technical Analyst at SAMCO Securities, noted that Tata Motors has seen a sharp correction since its peak. However, a Doji candlestick formation at the ₹600–620 support zone signals potential stability. This support coincides with a rising trendline, suggesting the possibility of a reversal in the near term.

Despite trading below key moving averages, the daily Relative Strength Index (RSI) indicates oversold conditions, hinting at a short-term recovery. Options data for the March series highlights ₹600 as a strong support level, while ₹700 serves as a key resistance.

What Lies Ahead for Tata Motors?

In summary, while Tata Motors has faced a prolonged correction, its long-term returns remain strong. However, near-term challenges persist, including weak demand in China and Europe, rising costs, and intensified competition in the EV market.

Investors may see the ₹600–620 range as a potential entry point, but caution is warranted due to ongoing macroeconomic and sector-specific risks. The company's Q4 performance will be critical in determining whether Tata Motors can stabilize and regain investor confidence.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions.