Tata Motors share price (NSE: TATAMOTORS): Before the tariffs were imposed, the US levied a 2.5 percent import duty on passenger vehicles. While the new 10 percent rate is lower than the retaliatory tariffs, it still remains higher than the original standard rate.
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Shares of Tata Motors slipped over a percent to Rs 677 in morning trade on June 17 despite the UK and the United States signing a trade agreement on the sidelines of the G7 Summit in Canada, a move that could benefit the auto major’s luxury arm, Jaguar Land Rover.
Under the new agreement, tariffs on UK auto exports to the US will be reduced from 27.5 percent to 10 percent starting later this month, covering an annual quota of 1,00,000 vehicles. A separate list of other UK products that could enter the US without the existing 25 percent tariff will be finalised at a later stage.
Before the imposition of tariffs, the US’s import duty on passenger vehicles stood at 2.5 percent, which means, although the new tariff rate will be lower than the reciprocal tariffs, it will be higher than the earlier standard rate.
Should you buy, sell or hold the Tata Motors’ stock?
Morgan Stanley has maintained an ‘Equal-weight’ rating with a target price of Rs 715, an upside potential of 4.1 percent from the last close. The brokerage notes that, unlike previous downcycles, Jaguar Land Rover (JLR) is now in a stronger position across various metrics. However, it expects the earnings recovery to be gradual and warns of possible downgrades in FY26. Morgan Stanley’s FY26 earnings per share (EPS) estimate is 8 percent below the consensus. It also highlights that free cash flow (FCF) remains crucial for companies with limited growth.
Jefferies has reiterated its ‘Underperform’ rating on Tata Motors while cutting the target price to Rs 600 from Rs 630. It has also slashed FY26–28 EPS estimates by 12–19 percent, primarily due to lower projected margins for JLR in the range of 6.0–6.5 percent during the period. While acknowledging Tata’s efforts to strengthen its brand in India and at JLR, Jefferies remains cautious due to several challenges. These include a slowdown in India’s commercial vehicle (CV) demand, increasing competition in the electric passenger vehicle (PV) segment, and potential headwinds for JLR, whose key models—Range Rover, Range Rover Sport, and Defender—are now 2–4 years old.
Nuvama Institutional Equities, with a ‘Reduce’ call on the stock, said that the management expects EBIT margin to contract from 8.5 percent in FY25 to 5–7 percent in FY26. Margins to be impacted by tariff imposition by the US, continuing weakness in China demand and increased sales promotion/brand-building efforts. Meanwhile, lower margins and higher working capital needs are expected to drag FCF from GBP1.5bn in FY25 to close to zero in FY26.
During its investor day, JLR listed multiple present and emerging risks that could impact profitability. These include a semiconductor shortage, aluminium supplier flooding, rising thefts in the UK, and looming concerns such as US tariffs, the transition to battery electric vehicles (BEVs), tightening regulations, and shifting customer expectations.
At about 9:40 am, shares of the company were trading at Rs 680, lower by 1 percent from the last close. Tata Motors’ stock is down 8 percent since the beginning of the year.
