Explained: Why Tata Motors share price has fallen 5% today

Tata Motors shares fell by 5% in early trade on Friday, reaching a low of Rs 616.25 during the day. The stock had opened at Rs 650.95, lower than its previous closing price of Rs 654.05.

At the time this article was being written, Tata Motors stock was trading at Rs 621.45. The stock now seems to be moving closer to its 52-week low of Rs 606.20, which it had touched on 3 March 2025.

Tata Motors shares have gone down 8.68% in the last 5 days, 33.43% in the past month and 38.75% in the last year.

The fall in Tata Motors’ share price comes after global brokerage firm CLSA removed the stock from its high conviction outperform list. The firm had only added Tata Motors to this list around two months ago.

CLSA also downgraded Tata Motors back to a regular “outperform” rating and cut its price target by 18%, from Rs 930 to Rs 765. This new price target still suggests an upside of 17% from Thursday’s closing price, but investors appear to be reacting strongly to the downgrade.

One of the key reasons behind CLSA’s change in view is the likely drop in Jaguar Land Rover (JLR) sales. The firm said that the recently announced 25% import tariffs in the United States, along with the discontinuation of some Jaguar models, could lead to a 14% drop in JLR’s sales volumes in the financial year 2026.

Because of this expected fall in sales, Tata Motors' operating profit margins (EBIT margins) might also fall. CLSA expects margins to drop to 7% in 2026-27, compared to the 9% that the company is expected to achieve this year. The decline is mainly due to lower production and sales, which means higher costs per unit.

CLSA has also lowered its estimate for JLR’s EBITDA (Earnings Before Interest, Tax, Depreciation and Amortisation) for the financial year 2026. However, the brokerage still expects JLR to stay free cash flow positive in both 2026 and 2027, meaning the company should still be generating cash even after spending on its operations and investments.

In addition to this, CLSA has reduced the valuation multiple it uses for JLR from 2.5 times to 2 times EV/EBITDA. This decision was made based on short-term challenges in JLR’s growth. The firm noted that most of these risks are already being reflected in the current stock price. At today’s levels, JLR is trading at just 1.1 times EV/EBITDA, which is seen as quite low.

CLSA also mentioned India’s commercial vehicle (CV) market in its report. It believes that the CV cycle in India is likely to bottom out in the financial year 2026. Because of this, it has extended its valuation model for Tata Motors’ India CV business to financial year 2028. According to the brokerage, this extension could add Rs 127 per share to Tata Motors’ value.

CLSA said that this could help offset some of the negative impact from JLR’s challenges, especially from the demand risks in the US caused by higher import tariffs.

(Disclaimer: The views, opinions, recommendations, and suggestions expressed by experts/brokerages in this article are their own and do not reflect the views of the India Today Group. It is advisable to consult a qualified broker or financial advisor before making any actual investment or trading choices.)