Tata Motors Rebound? Morgan Stanley Sees 38% Upside After Prolonged Losses

Tata Motors Ltd. may witness a significant 38% rise in its stock price from Tuesday’s closing level, according to a research note issued by Morgan Stanley on March 5. Despite this optimistic price projection, the global brokerage firm has maintained an “equalweight” rating on the stock, which is akin to a neutral stance. Morgan Stanley has set a target price of ₹853 for Tata Motors, indicating potential growth but without a strong buy or sell recommendation.

Key Factors Driving the Projection

One of the primary reasons behind Morgan Stanley’s outlook is the impressive retail sales performance of Land Rover, Tata Motors’ luxury SUV brand, in the United States. The brokerage highlighted that Land Rover’s retail sales surged by 79% year-over-year (YoY) in February 2025, reaching 11,900 units. This marks a continuation of strong sales momentum, following 70% YoY growth in January 2025 and 34% in December 2024.

Morgan Stanley also pointed out the contribution of high-margin premium models to Land Rover’s sales mix. In February 2025, premium models accounted for 76% of total retail sales, slightly lower than the 78% premium mix recorded in December 2024. The firm sees this as a positive indicator of sustained demand for Land Rover’s luxury offerings in the US market.

While Tata Motors has faced challenges over the past several months, the strong performance of its luxury vehicle division, particularly in a key market like the US, appears to be a major factor influencing the brokerage’s stock price projection. However, Morgan Stanley’s decision to maintain a neutral rating suggests that while the upside potential is recognized, other factors may still warrant caution in the near term.

Morgan Stanley Notes Moderation in Land Rover Incentives, Steady Jaguar Sales Growth in the US

Morgan Stanley’s latest analysis highlights a shift in the incentive strategy for Land Rover in the US market. According to the brokerage, Land Rover’s incentives grew by 69% year-over-year (YoY) in February 2025. While this still represents a significant increase, it marks a deceleration compared to the 73% YoY rise in January 2025 and the sharp 150% YoY surge in December 2024. This trend suggests that while incentives remain a tool to drive sales, their rate of growth has begun to moderate.

Additionally, the report sheds light on the performance of Jaguar, Tata Motors’ premium car brand. Jaguar’s retail sales in the US increased by 2% YoY in February 2025, reaching 975 units, according to Morgan Stanley. While this growth is modest compared to the rapid expansion seen in Land Rover’s sales, it reflects a steady performance for the brand in a highly competitive luxury car market.

The brokerage’s insights suggest that Tata Motors’ luxury vehicle segment continues to experience dynamic shifts, with Land Rover maintaining strong momentum while Jaguar sees more measured growth. The evolving incentive trends indicate that Land Rover’s demand may be stabilizing, even as premium sales remain a key driver for Tata Motors in the US market.

US Market Remains Vital for JLR as Tata Motors Navigates Sales Decline; European Policy Shift Could Offer Relief

The United States continues to be a key market for Jaguar Land Rover (JLR), playing a significant role in the company’s global performance. According to a report by Morgan Stanley, the US contributed 23% of JLR’s total global sales in the fiscal year 2024 (FY24). Additionally, JLR’s strong presence in the region had a notable impact on its parent company, Tata Motors, accounting for approximately 15% of Tata Motors’ total consolidated revenue during the same period.

Potential Policy Shift in Europe Could Benefit JLR

Morgan Stanley also pointed to an upcoming regulatory development in Europe that could have implications for JLR. The European Commission’s Industry Action Plan, set to be announced on March 5, is expected to outline potential adjustments to CO2 emissions regulations. If the policy shifts toward a more flexible framework, it could provide JLR with greater room to maneuver in meeting stringent environmental standards. Such a change could ease regulatory pressures and potentially benefit the company’s operations in the European market.

Tata Motors Reports 8% Decline in February Sales

Despite JLR’s strong performance in key international markets, Tata Motors’ overall sales figures for February 2025 reflected a downturn. The company reported total sales of 79,344 units, marking an 8% decline compared to 86,406 units in February 2024.

Breaking down the numbers further:

• Domestic sales fell 9% YoY to 77,232 units, indicating a slowdown in demand within India.

• In contrast, Tata Motors’ international business segment showed resilience, posting a 34% YoY growth with 2,112 units sold in February 2025.

The data highlights a contrasting picture—while domestic sales faced headwinds, the company’s international operations, including JLR’s performance in the US, provided a counterbalance. The evolving regulatory landscape in Europe and shifting market dynamics will be key factors to watch in the coming months.

Tata Motors Sees Decline in Both Passenger and Commercial Vehicle Sales in February 2025

Tata Motors experienced a decline in sales across both its passenger vehicle (PV) and commercial vehicle (CV) segments in February 2025, reflecting a slowdown in demand compared to the previous year.

According to the company’s latest sales report, passenger vehicle (PV) sales stood at 46,811 units, marking a 9% year-over-year (YoY) decline from February 2024. This segment, which includes popular models across hatchbacks, sedans, and SUVs, faced headwinds amid changing market conditions.

Similarly, commercial vehicle (CV) sales dropped 7% YoY to 32,533 units, indicating a softer demand for trucks, buses, and other commercial transport vehicles. The decline in CV sales suggests a possible slowdown in infrastructure-related demand or fleet expansion by businesses.

Despite these declines, Tata Motors continues to navigate evolving market dynamics, with a mix of domestic and international performance shaping its overall sales trajectory.

Tata Motors Reports 22% Decline in Q3 FY25 Net Profit; Stock Sees Intraday Gains Following Morgan Stanley’s Outlook

Q3 FY25 Financial Performance

Tata Motors reported a 22% year-over-year (YoY) decline in its net profit for the third quarter of the fiscal year 2025 (Q3 FY25), with earnings falling to ₹5,451 crore. The company also saw a slight dip in its operating performance, as reflected in its Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA), which stood at ₹15,521 crore, registering a 1.9% YoY decline.

The EBITDA margin, a key profitability indicator, contracted to 13.7% in Q3 FY25, compared to 14.3% in Q3 FY24, signaling a marginal reduction in operating efficiency. Despite these near-term financial pressures, Tata Motors remains optimistic about a potential recovery in domestic demand. The company attributes this expected improvement to factors such as increased infrastructure spending, the introduction of new products, and stable interest rates, which could support future growth.

Stock Performance and Market Reaction

Following Morgan Stanley’s latest assessment, Tata Motors’ stock witnessed a 3.2% intraday surge on March 5, reaching a high of ₹639 during the trading session. The positive market reaction suggests investor interest in the company’s long-term potential, despite recent financial challenges.

However, the stock remains 46% below its all-time high of ₹1,179.05, which was recorded in July 2024. This gap reflects the volatility that Tata Motors has experienced in recent months, influenced by various macroeconomic and sectoral factors.

As the company navigates these challenges, investor sentiment will likely be shaped by upcoming financial results, evolving market conditions, and broader industry trends.

Tata Motors Stock Faces Prolonged Downtrend but Shows Strong Long-Term Growth

Tata Motors’ stock has faced significant pressure over the past year, recording a 37% decline as market sentiment remained weak. The downtrend has been persistent, with the stock falling for seven consecutive months since August 2024.

In February 2025 alone, the stock dropped over 13%, reflecting investor caution amid broader market conditions and company-specific challenges. This continued decline highlights the headwinds the company has been navigating in recent months.

However, despite the recent setbacks, Tata Motors has demonstrated strong long-term growth. Over the past five years, the stock has surged 390%, showcasing its ability to generate substantial returns over an extended period. This long-term trajectory underscores the company’s resilience and its performance through various market cycles.