Tata Motors, a leading player in the Indian automotive sector, has officially implemented its demerger plan, splitting its commercial and passenger vehicle businesses. However, global brokerage firm Jefferies has raised concerns, assigning an “Underperform” rating with a target price of ₹575 per share, signaling a potential 15% decline from current levels.
Jefferies’ cautious outlook stems from multiple challenges. The brokerage highlighted uncertainties in Tata Motors’ global operations, particularly the recovery of its luxury arm, Jaguar Land Rover (JLR), following a recent cyberattack. Additionally, the passenger vehicle segment faces headwinds due to softening demand in key markets. On the commercial vehicle front, despite benefits from lower GST rates and rising freight rates, Jefferies remains wary of margin pressures.
Tata Motors’ stock, part of the Nifty 500 and a large-cap auto name, saw a modest 1.14% uptick recently. However, analysts caution that short-term volatility may persist as the demerger’s impact unfolds and market conditions remain challenging. While the demerger aims to unlock value by allowing focused growth in each segment, Jefferies believes near-term risks outweigh potential gains.