Tata Motors, one of India’s leading automobile manufacturers, is facing selling pressure after its Q3 FY25 earnings report missed market expectations. The company’s stock tumbled as much as 6.8% to ₹701.40 on the BSE at 1:30 PM Thursday, recovering slightly from an intra-day low of ₹684.25.

With a 22% year-on-year (YoY) drop in net profit to ₹5,451 crore, missing analyst estimates of ₹6,791 crore, investors are left wondering: Is it time to buy, hold, or exit Tata Motors shares? Let’s break it down.

Tata Motors Q3 FY25 Earnings: Key Highlights

1. Profit Misses Expectations

• Tata Motors’ net profit fell 22% YoY to ₹5,451 crore, much lower than the estimated ₹6,791 crore.
• The decline was primarily due to higher costs, weaker margins in Jaguar Land Rover (JLR), and lower operating efficiency.

2. Revenue Growth Slows Down

• The company reported a 3% YoY increase in revenue, reaching ₹1.13 lakh crore.
• The slow revenue growth indicates that higher input costs and macroeconomic challenges are weighing on demand.

3. Margin Pressure at Jaguar Land Rover (JLR)

• JLR, which contributes significantly to Tata Motors’ revenue, reported a 10% YoY decline in profit due to weak demand in key markets like China.
• The EBITDA margin fell to 11.8%, missing analyst expectations.

4. Lower Guidance for FY25

• Tata Motors cut its full-year guidance, citing slowing demand, supply chain issues, and rising costs.
• The company warned that JLR’s sales may see further pressure, impacting overall earnings.

Why Are Tata Motors Shares Falling?

1. Profitability Concerns – The company’s earnings miss and margin contraction have led to a bearish sentiment among investors.
2. JLR Worries – Slower growth and lower profitability at JLR, a key revenue driver, have spooked investors.
3. Macroeconomic Headwinds – Weak consumer demand, supply chain issues, and high input costs are impacting overall performance.
4. High Expectations Already Priced In – Tata Motors stock had a strong rally in 2023-24, and the latest results indicate slower growth ahead.

What Should Investors Do?

1. Short-Term Traders: Avoid Fresh Buying

• Given the sharp drop and negative sentiment, traders should wait for stability before making new positions.
• If the stock falls below ₹680, further downside could be expected in the short term.

2. Long-Term Investors: Hold or Buy on Dips

• Fundamentally, Tata Motors remains strong, with leadership in the EV market and steady growth in domestic passenger and commercial vehicle segments.
• Long-term investors may consider buying on dips if the stock corrects further.

3. Monitor JLR’s Performance

• JLR’s recovery will be critical for Tata Motors’ future earnings growth.
• Investors should track global luxury car demand, China sales trends, and JLR’s new model launches before making long-term investment decisions.

Brokerage Views on Tata Motors After Q3 Results

1. Morgan Stanley – Neutral, Target Price: ₹750

• The brokerage expects near-term weakness but sees long-term growth potential in EV and commercial vehicle segments.

2. CLSA – Underperform, Target Price: ₹710

• Concerned about JLR’s weak margins and Tata Motors’ high valuations, CLSA has cut its target price.

3. Jefferies – Buy, Target Price: ₹820

• Jefferies remains bullish on Tata Motors due to its EV leadership and cost-cutting measures.

Conclusion: What’s Next for Tata Motors Stock?

Tata Motors’ Q3 results have triggered a short-term correction, driven by lower profits, JLR’s margin pressures, and cautious guidance. While near-term challenges persist, long-term growth drivers like EV expansion and India’s automotive boom remain intact.

Investors should closely monitor JLR’s performance and broader market trends before making investment decisions. While short-term traders may stay cautious, long-term investors can consider buying on dips for steady gains in the future.

FAQs

1. Why did Tata Motors stock fall after Q3 results?
Tata Motors stock dropped due to lower-than-expected profit, weaker margins in JLR, and a guidance cut for FY25.

2. Is Tata Motors a good buy after the correction?
For long-term investors, Tata Motors remains fundamentally strong, but short-term traders may want to wait for stability.

3. How did JLR perform in Q3?
JLR’s profit fell 10% YoY, with lower margins due to weak China sales and higher input costs.

4. What is the long-term outlook for Tata Motors?
The company has strong growth potential in EVs, commercial vehicles, and passenger cars, making it a good long-term bet despite short-term challenges.

5. What is the target price for Tata Motors stock?
Brokerages have mixed views, with targets ranging from ₹710 (CLSA) to ₹820 (Jefferies), depending on JLR’s future performance.