New Delhi: Tata Motors' stock has been in free fall, wiping out over ₹2 lakh crore in market capitalization as it plunged 44% from its July 2024 peak. The stock, which once traded at ₹1,179, is now down to ₹661.75, leaving investors worried about further downside.

Why is Tata Motors Stock Falling?

The major reasons behind Tata Motors' sharp decline include:

Jaguar Land Rover (JLR) Weak Sales – JLR sales have slowed significantly in key markets like China and the UK, hurting revenue and profitability.
Tariff Uncertainties – Geopolitical concerns and possible tariff hikes have created additional challenges for JLR.
Declining Commercial Vehicle Sales – Domestic sales in the Medium & Heavy Commercial Vehicle (M&HCV) segment have softened. Intensifying Competition in EV & Passenger Vehicles – More players entering the EV space and passenger car segment have put pressure on Tata Motors' market share.

Analyst Take: Is The Worst Over?

CLSA View: JLR is currently trading at 1.2x FY27 EV/EBITDA, well below its historical multiple of 2.5x, indicating that the market has already factored in a 10% volume decline.
BNP Paribas: Maintains an ‘Outperform’ rating but highlights rising competition in India’s passenger vehicle and EV segments, along with weaker commercial vehicle demand and high compliance costs.

Will Tesla’s India Entry Hurt Tata Motors?

Tesla’s much-anticipated entry into the Indian EV market has raised concerns about Tata Motors’ dominance in the electric vehicle segment.

However, analysts believe:
Tesla’s high pricing (₹40 lakh and above) will not compete directly with Tata Motors’ mass-market EVs.
Tata Motors still holds a strong lead in India’s affordable EV segment.

CLSA’s Upgrade – Despite near-term headwinds, CLSA has upgraded Tata Motors to ‘High Conviction Outperform’ with a target price of ₹930, citing:
JLR’s transformation efforts
Improving free cash flow
A strong EV portfolio

Should You Buy Tata Motors Stock Now?

With the stock down 44% from its peak, some analysts suggest that the worst may be priced in. Tata Motors now offers a potential 40% upside if:
JLR sales recover in global markets.
Domestic EV & passenger car demand stabilizes.
Commercial vehicle sales pick up.

For long-term investors, this could be a buying opportunity, but short-term volatility remains a risk.

Tata Motors' January Sales Drop 7%

Tata Motors’ total vehicle dispatches in January declined 7% year-on-year, with 80,304 units sold compared to 86,125 units in January 2024.

Breakdown of Sales Decline:
Total Domestic Sales – Down 7% YoY to 78,159 units (from 84,276 units in January 2024).
Commercial Vehicles – 31,988 units, almost flat compared to 32,092 units last year.
Passenger Vehicles – Down 11% YoY, with 48,316 units sold (vs. 54,033 units in January 2024).

The decline in passenger vehicle sales suggests a slowdown in consumer demand, while commercial vehicle weakness indicates economic concerns.

Bottom Line: What Should Investors Do?

Tata Motors has been hit by global and domestic challenges, but long-term fundamentals remain intact.
The stock now trades at attractive valuations, with analysts predicting a 40% upside if business conditions improve.
Short-term risks remain, especially in the EV and commercial vehicle segments, so investors should watch JLR’s sales trends and domestic recovery closely.