Tata Motors shares declined by 2 percent on Tuesday after reports of weaker guidance from Jaguar Land Rover unit. The automobile major has been facing selling pressure over the last few months but there was a swift recovery from yearly lows. Investors are again staring at lower levels for Tata Motors in the upcoming sessions. The stock has witnessed higher volatility during the recent weeks but we also have a strong support in Rs 648 - 630 range. After a string of rallies, the stock has retreated sharply, undercut by sobering financial guidance from JLR, macroeconomic uncertainty, and shifting trade policy. Despite headwinds, the firm’s long-term fundamentals remain intact, with analysts forecasting a potential rebound post-FY26, contingent on successful execution of cost-saving strategies and global EV expansion.

Recent Stock Performance: Sentiment Turns Cautious

Tata Motors' stock has endured a bruising stretch in June 2025. Over four consecutive sessions, the stock shed more than 9%, closing at approximately ₹673 on June 17. The trigger was JLR’s revised FY26 guidance, which rattled investor confidence and cast doubt over near-term earnings potential.

The company became one of the worst performers on the Nifty 50, with its share price falling over 7% in the past week and nearly 12.88% over the past six months. The pivot in sentiment stems largely from weakened expectations around profitability and free cash flow for JLR, which contributes the lion’s share of consolidated revenues and earnings.

Key Catalysts Behind the Decline

JLR’s Dampened FY26 Outlook

Jaguar Land Rover, which accounts for over 70% of Tata Motors’ revenue and 80% of its profitability, slashed its EBIT margin forecast from 10% to 5–7% and reduced its free cash flow projection from £1.8 billion to near zero.

The guidance downgrade was driven by:

• Softening demand in China
• Trade and tech protectionism in the US and EU
• Weaker USD hurting exports
• Ongoing BEV transition, with high investment costs
• Stringent emissions regulations and rising warranty expenses

Tariff Headwinds in the US and EU

A new US–UK trade agreement will reduce tariffs on UK-built vehicles exported to the US from 27.5% to 10%, but only for a quota of 100,000 vehicles annually. While an improvement, it is still significantly above the pre-trade war 2.5% tariff. Tata Motors exported 102,000 units to the US from the UK in 2024, meaning part of its exports may still face steep tariffs.

The company is also in discussions with US regulators to reduce the 27.5% duty on Slovakia-manufactured vehicles.

Analyst Views: Mixed to Cautious

Technical Indicators: Bearish but Oversold

As of June 17, 2025:

• RSI: 38.39 (approaching oversold)
• MACD: 1.59 (mildly bullish)
• ADX: 11.59 (weak trend momentum)
• Stochastic Oscillator: 32.26 (suggests oversold zone)
• Williams %R: -96.18 (deep oversold)
• 50-Day EMA: 698.67 (current price below, bearish)
• Supertrend: 735.78 (bearish signal)

Takeaway: The stock’s technical chart paints a bearish yet oversold scenario. While short-term rebounds are possible, broader weakness prevails unless volume and sentiment reverse convincingly.

Financial Summary and Segment Dynamics

FY25 Financials:

• Consolidated Revenue: ₹4,45,939 crore
• Net Profit: ₹27,830 crore
• Q4 Revenue: ₹1,21,012 crore
• Q4 Profit: ₹8,470 crore
• Net Auto Cash: ₹1,000 crore
• PE Ratio: 11.07; PB Ratio: 2.06

Segment Performance:

• JLR: Faces declining margins, zero free cash flow outlook for FY26, and high capex for BEVs
• India CV: Slowing due to rail competition and high base effect
• India PV: Subdued momentum, muted demand and soft response to new launches
• EVs: Saw stronger H2 growth; expanding portfolio and support infrastructure

Macro and Strategic Outlook

Challenges:

• Weak macro demand, especially in China and Europe
• Tariffs on UK and Slovakian auto exports to the US and EU
• FX volatility—a weaker USD weighs on margins
• Capital-intensive BEV shift under evolving regulatory frameworks

Tailwinds:

• US–UK tariff deal offers relief, albeit partial
• JLR’s “Reimagine” transformation targets £1.4B in annual cost savings
• India: SUVs, CNG, and EVs are growth segments where Tata leads

Forecast and Investment Outlook

Short-Term:

Indicators are bearish. Most brokerages have trimmed near-term EPS estimates. With technicals in oversold territory, some bounce is possible, but conviction is lacking.

Mid-Term:

A recovery may begin from FY27 onward if cost-saving plans and BEV rollouts take hold. Tariff clarity and Chinese demand revival will be crucial.

Long-Term:

Tata Motors remains a vital player in global mobility. Its strategic position in EVs, SUVs, and commercial vehicles gives it lasting relevance. Execution will determine value realization.

Call for Action: Watch and Wait

Tata Motors has built a reputation for resilience, but it currently stands in the shadow of uncertainty. While analysts are divided, most see FY26 as a transitional year marred by weak JLR guidance and tariff-related stress. However, beyond the fog lies a potential turnaround—with operating leverage, electrification, and India’s market leadership lighting the way.

Investor Call: Caution is warranted in the short term. For long-term investors with a high risk tolerance, this may be a buy-on-dips opportunity—backed by global brand equity and scale, but not without volatility.