Tata Motors share price closed at Rs 687.5 on Friday, gaining 0.7 percent during the session. Tata Motors has witnessed strong pullback rally from yearly lows at Rs 535 and the stock could see higher levels in the upcoming sessions. Tata Motors stock has declined 7.3 percent over the last six months and next major resistance for the stock is between Rs 736 - 752 range. Tata Motors can emerge as a winner in the Indian markets if the company manages to launch impressive electric vehicles in affordable price range. While Tata Motors faces stiff competition from Mahindra & Mahindra, Hyundai and Maruti Suzuki, there is enough of demand in the Indian markets for every major automobile player to grow at a decent pace. The stock has suffered a steep decline over the past year, weighed down by margin compression and weak free cash flow guidance at its key subsidiary, Jaguar Land Rover (JLR). Yet beneath the noise, a more nuanced picture emerges—one of calculated reinvention through electric vehicles, a transformative demerger, and JLR’s long-range restructuring. Long term investors see value in the stock and this has led to value buying near 52-week lows for Tata Motors.

Stock Performance: Between Momentum and Correction

Tata Motors closed at ₹687.50 per share as of June 27, 2025. In the short run, it has shown signs of stabilization, rising 0.7 over the last day and 1.58% over the week. However, the past month has been turbulent, with the stock shedding 4.12%. The broader picture reveals a company recalibrating: down 29% year-over-year but still delivering a 65% gain over three years and an eye-popping 577% return over five years.

With a market capitalization of ₹2.52 lakh crore and a 52-week range of ₹1,179.00 to ₹535.75, Tata Motors remains volatile, particularly given headwinds from JLR and macroeconomic uncertainty in the global auto sector.

JLR’s Margin Reset and Strategic U-Turn

In a move that rattled markets, JLR—responsible for 71% of Tata Motors' revenue and 80% of its profit—cut its FY26 EBIT margin guidance from 10% to 5–7%. Free cash flow is expected to hover around zero, down from £1.5 billion in FY25. The causes? A confluence of weak Chinese demand, persistent U.S. tariffs, and supply chain headwinds.

Still, JLR is not standing still. Through its “Reimagine” program, the company is targeting £1.4 billion in annual cost savings and remains committed to its long-term EBIT margin goal of 15%. The market didn’t wait, sending Tata shares down 6% on June 16, 2025, with continued underperformance on the Nifty 50.

US-UK Tariff Relief: A Modest Win

In a bid to navigate tariff barriers, a new US-UK trade agreement reduces tariffs on UK-made cars to 10% (from 27.5%) for up to 100,000 units annually. While still higher than the pre-tariff norm of 2.5%, this offers JLR some relief. Company executives believe this annual quota will cover FY26 exports to the U.S.—a crucial market for JLR’s premium offerings.

Demerger Strategy: Unlocking Value

Tata Motors is advancing its plan to separate its commercial and passenger vehicle businesses into distinct listed entities. This move, expected to be completed by Q4 2025, aims to sharpen strategic focus and attract more specialized investor bases.

The bifurcation is seen as a structural shift, enhancing valuation transparency and allowing capital allocation aligned to segment-specific dynamics.

Electric Vehicles: The Crown Jewel

Tata Motors continues to lead the Indian EV market. Recent launches, like the Harrier.ev with a range of 622 km, showcase the company’s commitment. Looking forward, Tata intends to launch 30 new vehicles by 2030—both EV and ICE—under flagship models like the Sierra and Avinya. Backed by an investment plan of ₹35,000 crore, EVs remain Tata’s long-term growth lever.

Dividend and Cash Flow Milestones

Shareholders have approved a ₹6 per share dividend for FY25. Perhaps more importantly, Tata Motors became net cash positive in FY25—signaling a reversal from its historical leverage-heavy balance sheet.

Financials: The Numbers Behind the Noise

FY25 Performance (Ended March 31, 2025):

The catch? Q4 PAT declined over 51% YoY, underlining the gravity of JLR’s faltering margins.

Analyst Sentiment: Mixed but Slightly Bullish

Analyst recommendations range from cautious optimism to bearish. The 12-month target price consensus is between ₹775–₹780.

Strategic Outlook: Shifting Gears

JLR Strategy

• Cost Reduction: £1.4 billion annual savings
• Investments: £18 billion over FY24–28 in EVs, ICE, and ADAS
• China Growth: Freelander brand to launch via JV in H2 FY26
• Jaguar Repositioning: Refocused as a low-volume, high-margin luxury brand

Domestic Ambitions

• Commercial Vehicles: Targeting 40% share by FY27 (from 36%)
• Passenger Vehicles: Aspiring for 16% share by FY27 (from 13%)
• New Models: 7 launches planned by FY30

Risks: Macro, Micro, and Structural

• JLR Dependency: A double-edged sword, with margin erosion and zero FCF in FY26
• Tariffs: U.S. and China policy remains volatile
• Domestic Demand: PV segment growth could remain tepid
• Global Headwinds: From crude prices to supply bottlenecks

Credit Ratings and Balance Sheet Health

Moody’s reaffirmed Tata Motors’ Ba1 rating with a positive outlook, while JLR’s rating was also upgraded to Ba1. The company is now net cash positive, marking a notable turnaround in financial discipline.

Bottomline: At a Strategic Crossroads

Tata Motors embodies a tale of duality. In the short term, it is weighed down by JLR’s margin contraction, global tariff exposure, and domestic PV demand uncertainties. Yet its electric vehicle momentum, demerger roadmap, and strategic clarity in commercial vehicles offer long-term promise.

Investors should watch for:

• Quarterly updates on JLR margin recovery
• Progress in U.S. and China export markets
• Completion of the demerger
• Domestic EV demand curves

For now, Tata Motors is not a stock for the faint-hearted. But for the long-term investor willing to look past the fog of volatility, the road ahead—though bumpy—may still lead upward.