Why Tata Motors’ Shares Falling? Check Key Reasons

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As of 28th October, Tata Motors Ltd. is experiencing a rise in stock price to ₹410.35, an increase of 0.037%, and has lost 45.59% over the last nine days. Despite some short-term gains, the stock has significantly underperformed the market and its sector, with a year-over-year return of -57.41% and declining financial metrics. Over the past year, the stock has generated a return of -45.67%, while its profits have fallen significantly by 39.8%. The company has strong long-term growth potential, with annual net sales growth of 13.59%, but recent financial results show declines in profit before tax, profit after tax, and net sales compared to previous quarters. 

Tata Motors said it would notify the ‘A’ ordinary shareholders individually, as well as the stock exchanges, of the distribution of NOS as cash or credit. Tata Motors’ shares have once again started their downward movement, and this could be due to many reasons. The market capitalisation of Tata Motors is ₹1,51,893 crore, with a book value of 301.87, an ROE of 20.39%, and a dividend yield of 0.56%. 

Key Reasons for Decline in the Share Price of Tata Motors Company

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There are several reasons why the share price of Tata Motors has been falling, including geopolitical tensions, reduced JLR sales putting pressure on the company’s Demerger, the semiconductor shortage, FII Selling, Price cuts for theTata Nexon, and the Entry of a new competitor. 

Below are the reasons for the decline in the Tata Motors share price

• Geopolitical tensions: Rising prices, supply disruptions, among other factors, may impact European companies, and the Russia-Ukraine war is already creating significant geopolitical tensions across the country.
• Demerger: The company demerged its commercial vehicle business into a new entity, Tata Motors Commercial Vehicles Ltd. Tata Motors’ demerger share entitlement ratio is 1:1, meaning that Tata Motors shareholders will be issued one equity share of TML Commercial Vehicles Limited for every share held in Tata Motors.
• Profit Booking: Auto stocks had surged recently amid hopes that automakers would pass the benefits to customers, driving increased demand. Shares of Tata Motors also declined, contributing to the overall market weakness. 
• Production Halt Due to Cyberattack: Tata Motors’ shares slipped after reports revealed that Jaguar Land Rover (JLR), its UK-based luxury car division, was hit by a cyberattack. The cyberattack, believed to be ransomware, has impacted its factories in several countries, including India, the UK, China, Brazil, and Slovakia.  
• Entry of a new competitor: The above price cuts and range enhancements follow the entry of new competition. Due to intense competition from a seasoned competitor, Tata Motors’ share price is facing pressure.
• FII Selling: Interest rates are rising in developed markets like the USA. This makes emerging markets less attractive to FIIs for selling their holdings in companies operating in those markets. The stake was reduced to 13.7% by the end of the June quarter.       

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Tata Motors: An Overview

Tata Motors is an Indian multinational automotive company, headquartered in Mumbai and part of the Tata Group. The company produces cars, trucks, vans, and buses. Tata Motors has vehicle assembly operations in India, the United Kingdom, South Korea, Thailand, Spain, Slovakia, and many other countries. It plans to establish plants in Turkey, Indonesia, and Eastern Europe. In March 2024, Tata Motors announced plans to undergo a significant restructuring by splitting into two separate listed entities. This strategic move aims to enhance operational efficiencies and focus on distinct business segments. The Tata 407 is a light commercial vehicle (LCV) that has sold over 5,00,000 units since its launch in 1986. 

Tata Motors Company Share Price Target

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Tata Motors Company Ltd has an average share price target of 822.88. The consensus estimate represents an upside of 100.48% from the last price of 410.45. View 15 reports from 8 analysts offering long-term price targets for Tata Motors Passenger Vehicle Ltd. The Tata Motors Book Value is 301.87, with the dividend yield of 1.46%, and the P/E Ratio is 7.03. The 29 analysts offering 1-year price forecasts have a maximum estimate of 537.30 and a minimum estimate of 365.25. The broker has maintained the previous recommendation but increased the share price target, and the broker has upgraded this stock from its last report. 

Tata Motors Company: Performance Analysis

 In terms of market capitalisation, Tata Motors Passenger Vehicles has a market capitalisation of ₹1,51,307.00 crore, making it a large-cap company. The stock’s price-to-earnings (P/E) ratio is 6.98, significantly below the industry average of 23.48, suggesting a potential valuation within the sector. Over the past year, the stock has declined by 24.33%, contrasting with the Sensex’s 5.92% gain. However, in the short term, Tata Motors has outperformed the Sensex over the last week, gaining 2%.24% compared to the index’s 0.38%. Despite some fluctuations, the stock remains above its 5-day moving average, though it trades below its longer-term moving averages.

Tata Motors: Analysts’ Rating

• The average 12-month price target is ₹708, and the consensus rating is Hold (mix of Buy, Hold & Sell). 
• The analyst’s target range is observed between a high of ₹870 and a low of ₹650. 
• According to some analysts, some concerns remain with a ‘Reduce’ call of ₹680. 
• The analyst’s sentiment is mixed; there are recent bullish calls (ICICI, JM) but also cautious ones (Motilal Oswal, Nuvama).

What are the Future Predictions of Analysts?

 Despite short-term challenges, Tata Motors remains well-positioned for long-term growth due to its highly increased fundamentals and alignment with India’s energy transition goals. 

• Renewable Energy Focus: Tata Motors is consistently growing to become a leading renewable energy company. It aims to significantly increase its RE capacity, with substantial annual additions planned and significant capital expenditure allocated to this sector.
• Electric Vehicle (EV) Infrastructure: The company is heavily investing in India’s growing EV sector, which has developed an extensive network of charging stations. This early investment positions Tata Motors to capitalise on the rapid expansion of EV adoption.
• Strong Financial Performance: Tata Motors has shown consistent financial growth, with positive trends in sales and net profit over the recent years. Its Q4 FY25 results further demonstrate robust performance, with a record consolidated PAT and a recommended dividend.

Tata Motors is also focusing on expanding its commercial vehicle business, aiming to reach a 40% share by FY27. Near-term challenges for the company include global economic uncertainties, supply chain issues, and the transition to EVs. 

What is the Right Time to Buy Tata Motors Company’s Shares?

According to analysts, Tata Motors’ share price is determined by market factors. The share price has decreased due to internal company factors, as discussed above. Therefore, investors must review all relevant factors before investing in Tata Motors. There are some factors to consider before investing in Tata Motors Company shares.

• Strong Fundamentals: Investors should review Tata Motors Company’s fundamentals before investing. If a company has strong fundamentals, high profitability, and good management, then investors should invest in it.    
• Financing Partnerships: Financing partnerships bridge the gap between customers and financial institutions, facilitating the distribution of a wide range of products and generating positive sales revenue for many consumers.   
• Growth in the Vehicles Sector: The company is well-positioned in the electric vehicle sector to deliver benefits to Tata Motors. This dominant sector increases demand and prices for Tata Motors.
• Highly Volatile: Prices are highly volatile, so price changes have a significant impact on Tata Motors Company stock prices. Investors must review the market structure before investing in Tata Motors Company shares.   

Is It Good to Buy Tata Motors Company Shares?

Before deciding whether to invest in Tata Motors Company shares, investors must analyse the strong long-term prospects against its current high valuation. Tata Motors’ stock is highly profitable in the long term. It could be a reasonable addition to a portfolio, especially when investors are willing to stabilise their portfolio’s risk profile. It is also a government-backed company with a promising dividend yield amid aggressive growth.

On the other hand, investors must assess the company’s financial growth and prospects, its current market valuation, and the project risks and debt before investing in Tata Motors Company shares.  

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Conclusion

In the past five trading sessions, Tata Motors shares have declined 5%. Over the past year, the share has dropped about 30%. The stock touched its 52-week high of ₹1,000 on 27th September 2024 and a 52-week low of ₹542.55 on 7th April 2025. Investors should evaluate the company’s fundamentals, corporate governance, and stock valuation as key factors in conducting due diligence before making investment decisions. Tata Motors said it would notify the ‘A’ ordinary shareholders individually, as well as the stock exchanges, of the distribution of NOS as cash or credit. Tata Motors’ shares have once again started their downward movement, and this could be due to many reasons. 

FAQs

What are the key reasons for the fall in the share price of Tata Motors?

Ans. There are several reasons why the share price of Tata Motors has been falling, including geopolitical tensions, reduced JLR sales putting pressure on the company’s Demerger, the semiconductor shortage, FII Selling, Price cuts for theTata Nexon, and the Entry of a new competitor. 

What are the key factors that affect the share price of Tata Motors?

Ans. Investors should review Tata Motors Company’s fundamentals before investing. If a company has strong fundamentals, high profitability, and good management, then investors should invest in it. Financing partnerships bridge the gap between customers and financial institutions, facilitating the distribution of a wide range of products and generating positive sales revenue for many consumers.

Is Tata Motors undervalued at current levels?

Ans. With a P/E Ratio of around nine and a reasonable price-to-book and price-to-sales ratios, Tata Motors appears undervalued considering it growth prospects, but risks remain due to cyclicity and global exposure.

Should You Invest in the Tata Motors shares?

Ans. Tata Motors is consistently growing to become a leading renewable energy company. It aims to significantly increase its RE capacity, with substantial annual additions planned and significant capital expenditure allocated to this sector. The company is heavily investing in India’s growing EV sector, which has developed an extensive network of charging stations. This early investment positions Tata Motors to capitalise on the rapid expansion of EV adoption.    

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