Should you buy Tata Motors shares after a 43% fall from peak? Here’s what analysts suggest
Market Overview: A Rocky Road Ahead?
Shares of Tata Motors Ltd. are currently trading at a 52-week low on Tuesday, February 25, having corrected 43% from their record high level of ₹1,179, which it had hit in July last year. The stock has been under pressure due to weak demand outlook for Jaguar Land Rover (JLR) across key markets and for domestic Heavy Commercial and Passenger Vehicles for financial year 2025-2026. The risk of import tariffs getting implemented in the US from the European Union, which will impact JLR sales in the US, has only added to the pressure.
What’s the Verdict, Analysts?
So, with the stock having corrected significantly, is it prudent to accumulate the stock at lower levels? Here’s what analysts are suggesting:
"Tata Motors is at levels last seen in September-October 2023 and it has retraced nearly 50% from the all-time highs. I think the stock has an important support near ₹630 – ₹640 zone and that should remain intact. I would recommend to continue to hold on to Tata Motors and possibly accumulate the stock at the lower levels. Eventually, we can expect the stock to move towards ₹850 – ₹900 levels again, but the time horizon has to be at least a year-and-a-half or more," said Ashish Kyal of Waves Strategy Advisors.
A Glimpse of JLR’s Future?
Gaurang Shah of Geojit Financial Services believes that Sanand will augur well for JLR production, which will result in lower prices for the models.
"Domestically the cars of Tata Motors are doing extremely well. Commercial vehicle business is also doing well. There is a news of hiving off of the commercial vehicle business into a separate entity. There is also news that the management mentioned about making the balance sheet debt free. So, from current levels, your downside is extremely protected. So, hold on to Tata Motors and if you have investable amount from a long-term point of view," he added.
CLSA’s U-Turn: A Sign of Optimism?
Last week, CLSA had also upgraded Tata Motors and included in its list of high-conviction outperform stocks. It said that at the current price, the implied share value of JLR is ₹200 per share compared to their target valuation of ₹450, giving enough cushion against the impact of a potential US tariff hike.
Analysts’ Take: A Consensus Emerges
Out of the 34 analysts that have coverage on Tata Motors, 20 of them have a "buy" rating on the stock, nine of them say "hold", while five of them have a "sell" rating. Consensus price targets imply a potential upside of 25% for the stock.
Conclusion: A Buying Opportunity?
In conclusion, while the outlook for Tata Motors may seem uncertain, the analysts’ consensus suggests that the stock has the potential to bounce back. With significant capital merger and synergy benefits, a potential upside of 25% and a supported valuation, it’s time to rethink your stance on Tata Motors. Should you buy Tata Motors shares after a 43% fall from peak? Here’s what analysts suggest. If you’re a long-term investor with an investable amount, consider accumulating this stock at current levels.
