Tata Motors PV Shares Fall 6% After Profit Plunges 80%

Post by : Saif

Tata Motors Passenger Vehicles shares fell sharply after the automaker reported an 80% decline in quarterly profit and warned that cost pressures could continue into the July-September quarter.

Shares of Tata Motors Passenger Vehicles fell as much as 6% on Friday after the company reported a steep decline in quarterly profit and warned investors about continued pressure on margins.

The stock was down 4.8% at Rs 332.85 during afternoon trading, marking its biggest single-day percentage decline since June 17. Tata Motors PV was also the biggest loser on the Nifty Auto and Nifty 50 indexes.

Quarterly Profit Drops 80%

Tata Motors Passenger Vehicles reported consolidated net profit of Rs 7.75 billion for the April-June quarter, sharply lower than Rs 39.24 billion recorded during the same period a year earlier.

The decline came as the automaker faced higher costs and pressure on margins across its businesses.

During a post-results call, CEO Shailesh Chandra warned that commodity-related cost pressures are expected to continue during the July-September quarter.

“The second quarter is going to hit us badly. Not just us, but the whole industry will get hit,” Chandra said.

JLR Faces Multiple Challenges

Jaguar Land Rover (JLR), Tata Motors PV's luxury vehicle business, accounts for around 80% of the company's revenue.

JLR's first-quarter margins came in below analysts' expectations. Tata Motors' domestic passenger vehicle business also reported weaker-than-expected margins.

The company is facing several challenges at JLR, including stronger competition, higher discounts and increased warranty costs.

These pressures have raised concerns about the company's profitability and cash generation in the coming quarters.

Analysts Cut Earnings Expectations

Brokerage Jefferies lowered its fiscal 2027 earnings-per-share estimate for Tata Motors PV by 10% and reduced its target price for the stock.

Jefferies maintained an "underperform" rating, pointing to continued challenges at JLR and pressure on the company's domestic passenger vehicle operations.

Nomura also warned that weaker margins at JLR and the domestic passenger vehicle business could affect Tata Motors PV's cash generation in the near term.

The brokerage maintained its "neutral" rating on the stock.

Read more: Iveco Profit Drops 28% as Tata Motors Takeover Moves Forward

Investors Remain Cautious

The sharp decline in Tata Motors PV shares reflects investor concerns about the company's ability to protect margins while dealing with higher commodity costs, competitive pressure and increased expenses.

With JLR contributing a large portion of revenue, developments in the luxury vehicle business are likely to remain important for Tata Motors PV's financial performance.

Investors will also closely watch the company's performance during the July-September quarter as cost pressures and demand conditions continue to shape the outlook for India's passenger vehicle industry.

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