The stock price of Tata Motors dropped 8% to its lowest value in one year after Jefferies downgraded it. The brokerage firm lowered its price forecast to ₹660 while decreasing it from ₹930. Market analysts now see the stock can lose an additional 13% from its present position which sets a new floor value on this street. Tata Motors stock has decreased 36% from its highest level at ₹1,179.
Jefferies continued their positive recommendation on Tata Motors during the past three years and a half. The brokerage changed from its previous positive recommendation as it now believes many problems will affect the business. Jaguar Land Rover(JLR) needs to adjust operations because Chinese and European demand for their vehicles dropped and they must pay more for new customers plus spend more on vehicle warranties.
In his analysis, Jefferies outlined what lowers Tata Motors' future financial prospects. Tata Motors faces reduced JLR vehicle sales because customers in China and Europe show low purchasing interest. Tata Motors faces greater running expenses and growing costs of getting new customers plus warranty payments.
As Tata Motors celebrates more EV initiatives the industry brings difficulties for the company. More companies entering the electric vehicle market create business hurdles. The business suffers from weakened V2V sales along with lower-than-expected orders from commercial and private vehicle consumers. Recent market conditions have led Jefferies to reduce its projected earnings for Tata Motors by 7% to 11% across the three fiscal years.
Jefferies joins other research firms who now review Tata Motors differently. UBS remains in a sell stance for Tata Motors stock with their predicted price value at ₹760. UBS points out that JLR might miss its anticipated fourth-quarter results because they see serious problems with its recovery in China.
The brokerage ratings agency Morgan Stanley keeps an "equal-weight" position with their target price at ₹853. It pointed out the below-expectations earnings results and talked about problems the company faces to perform well in the future. CLSA keeps an optimistic outlook and continues rating the company "outperform" while foreseeing a share price of ₹930. CLSA forecasts improved results for the fourth quarter but remains cautious about continuing market difficulties.
After Tata Motor received its recent negative rating the share price reached its lowest level at ₹695.3 since the past year. Shareholders responded to Tata Motors by making their stock drop below its past price mark of ₹707. Investors now see the stock value 41% below its highest trading point which was ₹1,179.
After releasing the December quarter results Tata Motors failed to reach market expectations. The top management team remains confident that Jaguar Land Rover will achieve its earnings and cash flow targets throughout the entire financial year. Analysts remain reserved because they recognize that JLR's recovery in China will decide if the company achieves its targets for the next financial year.
People who analyze the market see difficult times ahead for Tata Motors because of what's happening in business today. Everyone will watch JLR's last quarter results to see if market conditions support the company's recovery plan or need further changes.