Tata Motors, a flagship company of the Tata Group, is known for its volatile stock performance in India’s auto sector. After surging nearly 18x from the COVID low of ₹65, the stock has fallen over 40% from its peak, causing investor concern. This article examines the reasons behind this sharp correction and evaluates what lies ahead for Tata Motors.
Table of Contents
- Tata Motors: A Quick Business Overview
- Historical Perspective: A Volatile Performer
- Current Downtrend: Key Reasons Behind the 40% Fall
- Valuation Analysis: Is Tata Motors Undervalued Now?
- Structural Positives and Long-Term Outlook for Tata Motors: EV Leadership, Investments, and Strategic Growth
- Shareholding Trends of Tata Motors in 2025: Promoter, FII, and Retail Investor Movements
- What Lies Ahead for Tata Motors: Near-Term Challenges and Long-Term Growth Prospects
- Conclusion: Tata Motors’ Current Challenges and Future Investment Outlook
- FAQs on Tata Motors Share Price Fall
Tata Motors operates in four major business segments that together define its vast footprint in the automobile industry. These include Commercial Vehicles, Passenger Vehicles, Jaguar Land Rover luxury cars, and Vehicle Financing. Each segment plays a crucial role in the company’s revenue generation and overall market presence. Understanding this diverse business structure is key to analysing Tata Motors’ performance and challenges.
- Commercial Vehicles (CV): India’s largest manufacturer in this segment, producing trucks, buses, and other CVs.
- Passenger Vehicles (PV): Includes internal combustion engine (ICE) and electric vehicle (EV) models such as Nexon, Punch, Tiago, and Harrier.
- Jaguar Land Rover (JLR): A British luxury brand acquired in 2008, accounting for the majority of Tata Motors' revenue.
- Vehicle Financing (Tata Motors Finance): An NBFC offering financing solutions for vehicles.
Revenue Split (FY24)
| Segment |
Revenue (₹ crore) |
Share (%) |
| JLR |
3,00,000 |
~68.5% |
| CV (Commercial Vehicles) |
78,500 |
~18% |
| PV (Passenger Vehicles) |
52,500 |
~12% |
| Others |
Remaining |
~1.5% |
| Total |
4,38,000 |
100% |
Geographic Revenue Distribution
- India: 35%
- North America: 18%
- China, UK, and Europe: Approximately 15% each
This diversified revenue base gives Tata Motors exposure to both emerging and developed markets, impacting its risk and growth profile.
Tata Motors has demonstrated significant share price volatility, characterised by sharp rises and steep falls over different periods. This roller-coaster performance reflects the company’s exposure to both domestic and global market dynamics. Investors have witnessed phases of exceptional growth as well as challenging downturns. Such volatility is typical for a company with diverse operations and cyclical industry influences.
- 2009–2015: Stock rose nearly 20 times.
- 2015–2020: Fell 90% due to various macroeconomic and company-specific challenges.
- 2020–2024: Rallied 18 times following recovery from COVID lows.
- 2024–2025: Currently down over 40% from peak highs.
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This cyclical pattern highlights the auto sector’s sensitivity to macro trends, global economic cycles, and company execution.
1. Weak Performance of Jaguar Land Rover (JLR)
JLR, which accounts for nearly 70% of Tata Motors’ revenue, is facing several serious challenges: slowing sales in China, weakening demand in Europe, and rising warranty costs. These factors have significantly impacted JLR’s profitability and investor confidence. The premium car market’s contraction in key regions is a major headwind. As JLR is the largest revenue contributor, its struggles heavily influence Tata Motors’ overall share price performance.
- China Market Slowdown:
- Premium car market in China declined 14% in Q3FY24.
- JLR's import sales fell by 6%.
- Local JLR sales in China plunged 27% year-on-year.
- Europe Weakness:
- High inflation and weak consumer confidence are curbing luxury car demand.
- Warranty Costs:
- Elevated warranty expenses have negatively impacted JLR's profitability.
- Profit Impact:
- In Q3FY24, JLR’s net profit declined 177% year-on-year, alarming investors.
These combined factors have created uncertainty for JLR and Tata Motors overall.
2. Domestic Market Headwinds
While the Indian business is growing, the pace has moderated significantly due to multiple factors: declining commercial vehicle sales caused by delayed infrastructure projects and adverse weather, as well as slowing passenger vehicle growth amid rising competition. Additionally, electric vehicle (EV) sales growth has tapered, challenged by intensified rivalry from established and new market players. These domestic headwinds are constraining Tata Motors’ growth momentum in its home market.
- Commercial Vehicle (CV) Segment:
- Q2FY24 volumes down 13.9% year-on-year.
- Q3FY24 volumes down 8.4% year-on-year.
- Reasons include delayed infrastructure projects, adverse weather, and a slowdown in mining activities.
- Passenger Vehicle (PV) Segment:
- Sales down 4.3% year-on-year in Q3FY24.
- Electric Vehicle (EV) Growth:
- EV sales growth slowed to just 5.8% year-on-year in Q3.
- Intense competition from Mahindra, Hyundai, MG, and new entrants is affecting market share.
Despite pioneering EVs in India, Tata Motors faces rising competition that limits growth unless innovation accelerates.
3. Weak Q3FY24 Financial Performance
Tata Motors’ Q3FY24 financial results were disappointing, shaking investor confidence. Net profit declined by 27%, driven by falling sales across key segments. Margin pressures and uncertainties around sustained growth further unsettled the market. This weak performance triggered profit booking among both institutional and retail investors, contributing to the stock’s recent downward trend.
- Net profit declined by 27%.
- Decline in sales volumes across CV, PV, and JLR segments.
- Concerns over margins and sustainability of growth intensified.
- Resulted in profit booking by both institutional and retail investors.
4. Global Macroeconomic Challenges
Tata Motors is vulnerable to macroeconomic headwinds due to its global revenue exposure. With over 65% of revenues generated outside India, the company faces risks from a global economic slowdown, geopolitical tensions, and supply chain disruptions. Additionally, changing tariff regulations and stringent emission norms in various regions further complicate operations. Weak demand recovery post-COVID in major markets like China and Europe continues to impact sales and investor sentiment.
- Global economic slowdown.
- Geopolitical tensions disrupting markets.
- Supply chain challenges and tariff regulations.
- Stricter emission norms increasing compliance costs.
- Weak demand recovery post-COVID in China and Europe.
These factors, largely beyond Tata Motors’ control, heavily influence demand and investor sentiment.
Want to understand the real reasons behind Tata Motors’ 40% fall? Watch the expert breakdown in the video below to get a clearer picture.
Tata Motors’ recent sharp share price decline has brought its valuation multiples to more attractive levels. Compared to industry peers, the stock now trades at lower P/E, P/B, and Price-to-Sales ratios, indicating potential undervaluation. This makes Tata Motors a compelling consideration for value-focused investors looking for long-term growth.
- P/E Ratio: Approximately 9
- P/B Ratio: 2.25
- Price to Sales: 3.77
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While not expensive, these valuations reflect the cyclical nature of its business and exposure to global markets. Comparisons with peers like Mahindra or Maruti Suzuki are not fully appropriate as those firms are more India-centric with different risk profiles.
Want to evaluate Tata Motors’ current stock performance, key financials, and chart trends? Check the latest Tata Motors share price for real-time updates and valuation insights.
Despite current challenges, Tata Motors possesses several strong foundational advantages that support a positive long-term growth trajectory. These include leadership in electric vehicles, significant investments in battery production, robust cash flows, visionary leadership, and strategic corporate restructuring.
- Strong EV Leadership:
- India’s leading EV manufacturer with popular models like Nexon EV and Punch EV.
- Plans for new launches including Harrier EV, Sierra EV, and Curvv.
- Battery Gigafactory Investment:
- ₹12,500 crore (~$1.5 billion) investment in Gujarat to localise battery production and reduce dependency.
- Cash Flow Strength:
- Operating cash flow surged from ₹14,000 crore in FY21 to ₹67,000 crore in FY24.
- Leadership:
- Strategic vision under Chairman N. Chandrasekaran focused on innovation, cost optimisation, and digital transformation.
- Upcoming Demerger:
- Plans to separate CV and PV businesses by July 2025, potentially unlocking shareholder value and improving focus.
Tata Motors' shareholding pattern in 2025 reveals a noticeable shift in investor behaviour. While promoters and FIIs have trimmed their stakes, retail investors have steadily increased their holding. These moves reflect a mix of institutional caution and growing retail optimism around the company’s future prospects.
- Promoters reduced stake between March and December 2024.
- Foreign Institutional Investors (FIIs) trimmed holdings slightly.
- Retail public shareholding increased from 18% to 21.9% over the past year.
These changes reflect both cautious promoter sentiment and growing retail interest.
Tata Motors stands at a crucial inflection point as it battles immediate global and domestic headwinds while laying the groundwork for long-term strategic growth. Investors are closely watching key developments in both the international and Indian markets to gauge the stock’s direction.
Near-Term Outlook:
- Stock performance will hinge on quarterly financial results, especially Q4FY25.
- Demand recovery in China and Europe remains critical.
- Domestic CV and PV sales trends will be closely watched.
- EV adoption rates and competitive response will impact growth trajectory.
Medium-to-Long Term:
- Tata Motors’ fundamentals remain solid with robust cash flows and clear strategic direction.
- JLR’s turnaround efforts and EV roadmap execution will be key.
- Demerger progress could unlock additional value for shareholders.
- However, premium valuations like Maruti or Mahindra & Mahindra are unlikely due to global exposure and cyclicality.
The 40% correction in Tata Motors shares is primarily driven by JLR headwinds, slowing EV growth, domestic market pressure, and disappointing quarterly results. Despite these challenges, the company’s strong EV leadership, robust cash flows, strategic investments, and visionary leadership position it well for the future. Investors should monitor global demand trends, upcoming financial results, and the demerger progress to assess investment timing.
Want to know why Tata Motors' share price jumped 4% after the demerger vote? Explore the full Tata Motors demerger breakdown and its market impact.
Q1. Why has Tata Motors’ share price fallen over 40% in 2025?
Multiple factors including weak JLR sales in China and Europe, slowing EV growth, domestic volume pressures, weak quarterly financials, and global macroeconomic challenges have contributed to the fall.
Q2. What is the revenue contribution of Jaguar Land Rover to Tata Motors?
JLR accounts for about 68.5% of Tata Motors' total revenue, making its performance critical to the company.
Q3. How is Tata Motors performing in the Indian EV market?
Tata Motors is India’s leading EV manufacturer with strong models like Nexon EV and Punch EV, although competition is increasing rapidly.
Q4. What are the key challenges for Tata Motors in 2025?
Challenges include global economic slowdown, JLR profitability pressures, domestic CV and PV sales moderation, and slowing EV growth amid competition.
Q5. Is Tata Motors undervalued at current levels?
With a P/E ratio of around 9 and reasonable price-to-book and price-to-sales ratios, Tata Motors appears undervalued considering its growth prospects, but risks remain due to cyclicality and global exposure.