Why Tata Motors is Falling? One of India’s top automakers, Tata Motors, has been a household name for many years. It produces premium brands like Jaguar Land Rover (JLR) as well as anything from little automobiles to large commercial vehicles. The company’s share price has fallen sharply despite its robust market presence and ambitious electric vehicle (EV) goals; on June 16, 2025, it was trading at ₹685.45, down 41.85% from its 52-week high of ₹1179.05. Investors, especially beginners navigating the erratic stock market, are alarmed by this fall. Why is the share price of Tata Motors declining? Should new investors view this as a chance to buy or panic? This article offers a thorough examination of the causes of the recession, professional opinions, and helpful guidance for beginners.
Why is the Tata Motors share price falling?
As one of the Nifty 50 index’s poorest performers in 2025, Tata Motors’ stock has been under a lot of strain. A mix of domestic and international issues is to blame for the drop, which wiped around ₹2 lakh crore in market capitalisation. Based on current market statistics and professional evaluations, the following are the main causes of the decline:
1. Weak Outlook for Jaguar Land Rover (JLR)
About 67% of Tata Motors’ income comes from JLR, the luxury automobile division located in the UK. The firm is heavily exposed to countries like the US (25% of sales) and China (27% of volumes). JLR’s performance has been significantly influenced by recent developments:
- Reduced FY26 Guidance: JLR reported a lower forecast for FY26 on June 16, 2025, predicting an EBIT margin of 5-7%, down from 8.5% in FY25, and nearly nil free cash flow. Business Today reported this downgrading, which caused Tata Motors’ shares to drop 5% intraday to ₹672.95.
- Weak Demand in Important Markets: As a result of economic slowdowns and increased competition, JLR is experiencing muted demand in China and Europe. According to India Today, luxury car sales have been hampered by China’s economic difficulties, which include a sluggish recovery.
- US tax Pressures: JLR halted exports to the US, a vital market, when the US announced in April 2025 that it would impose a 25% tax on imported automobiles. According to Business Today, this action led to an intraday decline of 11% on April 7, 2025, which caused the stock to drop to a 52-week low of ₹581.50.
2. Q3 FY25 Financials Are Disappointing
The sell-off was exacerbated when Tata Motors’ third-quarter earnings for October–December 2024, which were made public in January 2025, fell short of market expectations:
- Profit Decline: Because of lower JLR margins and muted volumes, the company’s consolidated net profit fell 22% year over year (YoY) to ₹5,451 crore from ₹7,025 crore. EBITDA dropped 14.7% to ₹13,081 crore, while margins shrank by 240 basis points to 11.5%, despite a tiny 1.8% increase in revenue to ₹1.13 lakh crore. JLR’s poor performance and greater warranty costs were identified by Financial Express as major drawbacks.
- Broking downgrades: Jefferies downgraded Tata Motors to “Underperform” on the results, noting a 16% YoY fall in EBITDA and lowering the target from ₹930 to ₹660. Nuvama predicted little growth through FY27 and lowered its aim to ₹720. These downgrades were cited by India Today as key factors in the stock’s 9% decline on January 30, 2025.
3. Challenges in the Domestic Market
Both the commercial vehicle (CV) and passenger vehicle (PV) markets in India provide challenges for Tata Motors:
- Declining Sales: According to The Economic Times, Tata Motors reported a 4% decline in overall sales for FY24–25 to 9,12,155 units, with PV sales down 3% to 5,56,263 units and CV sales falling 5% to 3,76,903 units. Sales of 90,500 units in March 2025 were unchanged, with a 3% drop in CV sales.
- Increasing Competition: Tata Motors’ market share has been under pressure since Tesla entered the Indian market and Maruti Suzuki, Hyundai, and Mahindra have become more competitive in the PV and EV sectors. Investors should be concerned about these competitive dynamics, according to ET Now.
- Cost Pressures: New truck cabin air conditioning rules and rising input costs have raised vehicle prices, which may have an effect on demand. According to the Economic Times, commercial vehicle prices would increase by 2% starting in January 2025.
4. Macroeconomic Headwinds Worldwide
The problems facing Tata Motors have been exacerbated by broader market and geopolitical factors:
- Global Sell-Off: In April 2025, a global market sell-off brought on by macroeconomic uncertainty destroyed ₹1.5 trillion of the Tata Group’s market capitalisation. The worst-hit company was Tata Motors, which fell 11% intraday to ₹542.55. This was one of the main causes of the stock’s 20% year-to-date decline in 2025, according to Equitymaster.
- China’s Restrictions on Rare Earth Exports: According to Financial Express, China’s crackdown on rare earth exports jeopardises EV component supply chains, which will affect Tata Motors’ EV strategy.
5. Technical Signs Point to a Bearish Trend
Strong negative momentum is evident as Tata Motors’ stock is trading below all major moving averages, including the 5-, 10-, 50-, 100-, 150-, and 200-day ones. Although the stock appears to be oversold based on the Relative Strength Index (RSI) at 24.98, experts caution that a recovery could not happen right away in the absence of favourable catalysts. According to Business Today, there is resistance around ₹800 and support levels at ₹650 and ₹520.
Should Beginners Panic?
Although the steep drop in Tata Motors’ share price may worry new investors, panic is not the solution. This is the reason:
- Oversold Territory: With an RSI of 24.98, the stock is oversold, indicating that there may be too much selling pressure. Although timing is unpredictable, oversold stocks have historically been a warning of a possible reversal. Positive RSI divergence was reported by Business Today, suggesting a potential comeback.
- Long-Term Potential: With a 24.54% yearly revenue increase in FY24 and a lower debt-to-equity ratio of 0.54 in FY25, Tata Motors’ fundamentals are still solid despite the short-term difficulties. Value may be unlocked by the company’s emphasis on EVs and its demerger strategy to split the CV and PV businesses. These were emphasised by Equitymaster as long-term advantages.
- Volatility is Normal: Stock market swings are frequent, particularly for car companies that are traded on international exchanges. Instead of using this as an excuse to make rash sales, beginners should use it as a teaching moment.
Advice: Beginners should steer clear of panic selling as it locks in losses. Instead, evaluate your holding time, risk tolerance, and investment objectives. Hold steady and keep an eye out for encouraging events, including increased demand for JLR or a rebound in domestic sales, if you have investments in Tata Motors. To match your portfolio with your financial goals, speak with a financial counsellor.
Should beginners buy the Dip?
While some experts advise caution, others see the notable decline in Tata Motors’ shares as a possible buying opportunity. This is a fair analysis:
The reasons for Buying the Dip
- Attractive valuations: Tata Motors is now trading at a P/E ratio of 9.29, which is much lower than its historical average and raises the possibility that it is undervalued. The company is currently trading at ₹685.45. There is potential for growth as CLSA projects JLR’s implied share value at ₹200, which is lower than the aim of ₹450 – CNBC TV18
- Analyst Optimism: 20 out of 34 analysts still have a “Buy” recommendation despite downgrades, with a median target of ₹779.18, which suggests a 14% upside. While LKP Securities believes that ₹970 is attainable, CLSA’s ₹968 objective indicates a 40% possible gain- Business Today
- Strategic Actions: In order to increase shareholder value, Tata Motors’ demerger plan, which was authorised in March 2024, intends to establish two publicly traded companies for CV and PV. In line with worldwide trends, it leads India’s EV industry and intends to sell 10 million units annually by 2030 – Equitymaster
- Potential for Domestic Recovery: Infrastructure expenditure and the introduction of new models are expected to propel recovery in India’s CV industry, which analysts predict would bottom out in FY26 – The Financial Times
Risks To Consider:
- Near-Term Challenges: Revenue and margins are at risk due to China’s economic downturn, US tariffs, and JLR’s poor FY26 projection – India Today
- Competitive Pressures: Tata Motors’ EV and PV market share may be eroded by growing competition from local firms like Mahindra and Tesla – ET Now
- Market Volatility: Supply chain interruptions and geopolitical unrest are two examples of global macroeconomic risks that might make the market volatile – Equitymaster
- Technical Resistance: According to Business Today, a prolonged rebound needs powerful catalysts, and the stock encounters resistance at ₹800.
Advice for Beginners: Buying the dip may seem alluring, but it’s dangerous if you don’t have a long-term outlook. According to Business Today, think about using a “buy on dips” approach between ₹650 and ₹680, with a stop-loss around ₹695. Don’t invest money you can’t afford to lose, start with a small investment, and diversify your holdings. Prior to expanding exposure, watch for indications of stabilisation, such as better JLR sales or more transparent US tariff policy.
A financial overview of Tata Motors
| Metric | Value(as of march 31, 2025) |
| Share Price | ₹684.45 |
| P/E Ratio | 9.29 |
| Market Capitalization | ₹252,338.07 Cr |
| Debt-to Equity Ratio | 0.54 |
| Dividend Yield | 0.84% |
| EPS (TTM) | ₹78.80 |
| 52-Week High/Low | ₹1179.05/₹535.75 |
| Revenue (FY25) | ₹439,695 Cr |
| Net Profit (FY25) | ₹27,862 Cr |
Source – Moneycontrol
Practical Tips for Beginners
- Educate Yourself: Learn the fundamentals of technical analysis and the stock market by using sites such as Zerodha Varsity.
- Start Small: To reduce risk and acquire expertise, make a modest initial investment.
- Diversify: Steer clear of investing all of your money in one stock, such as Tata Motors. To lower risk, distribute assets among several industries.
- Monitor News: Use reliable sources like Moneycontrol to be informed on Tata Motors’ activities, including JLR sales, EV debuts, and the demerger process.
- Speak with Experts: To customise your investing plan to your objectives and risk tolerance, consult a licensed financial advisor.
Frequently Asked Questions (FAQ)
Why is the share price of Tata Motors declining in June 2025?
JLR’s weak forecast for FY26, US import duties, muted demand in China and Europe, and domestic rivalry are the main causes of the fall. Today’s Business
Is it good for beginners to invest in Tata Motors?
Tata Motors’ EV concentration and demerger provide long-term possibilities, but its short-term volatility makes it dangerous. Beginners should have a long-term outlook and make cautious investments. CNBC TV18
Should I buy shares of Tata Motors right away?
The stock is oversold and could be worth buying; analyst targets point to a 14–40% increase. To control risk, however, wait for stability between ₹650 and ₹680 and set a stop-loss. Today’s Business
What risks come with investing in Tata Motors?
Risks include domestic competition, US tariffs, JLR’s poor demand, and unpredictability in the world economy.
How can beginners stay calm while the market declines?
To stay grounded, avoid impulsive selling, concentrate on long-term objectives, and speak with a financial counsellor.
What prospects does Tata Motors have for the future?
Although the company’s EV strategy, demerger, and prospective revival of the CV market in FY26 are encouraging, JLR’s performance and the state of the world economy are still crucial.
Conclusion
The 2025 drop in Tata Motors’ share price is the result of a number of issues, including domestic competition, international tariffs, and JLR’s bleak prognosis. Beginners don’t need to fear because the stock’s oversold state and its fundamentals point to a possible rebound. Long-term investors may be able to buy the drop, but given the short-term risks, prudence is urged. Beginners may successfully negotiate this turbulent time and set themselves up for possible benefits by starting small, diversifying, and being informed. To make well-informed decisions specific to your financial circumstances, always seek advice from a financial counsellor.
Disclaimer: This article’s content is intended only for general informational purposes and does not constitute financial advice. There are risks associated with stock investing, particularly in Tata Motors, and historical performance is not always a reliable predictor of future outcomes. Before making any investing choices, readers are urged to do their own research and speak with a licensed financial advisor. Any monetary losses resulting from the use of this content are not the responsibility of the author or publisher.
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