Tata Motors Stock Analysis: Resistance at ₹715 Crucial for Recovery Momentum

Published by Ecem EFE

16 June 2025, 13:17 published

Tata Motors Stock Drops 43% from High as JLR Faces Earnings Pressure

Tata Motors Stock Analysis – Tata Motors, India’s leading automobile manufacturer, saw its share price decline more than 5% in early trading on Monday following a downward revision of earnings forecasts for its British luxury car brand, Jaguar Land Rover (JLR). The company now expects JLR’s FY26 EBIT margins to be between 5% and 7%, significantly lower than the previously targeted 10%, largely due to ongoing US-imposed tariffs on vehicle imports.

Impact of US Tariffs on Tata Motors and Jaguar Land Rover

As the global automotive sector braces for the consequences of looming US tariffs, Tata Motors remains one of the most exposed Indian automakers due to its ownership of JLR. The Trump administration imposed a 25% tariff on all foreign-made vehicles sold in the US, the world’s second-largest car market. This tariff forced JLR to temporarily pause shipments to the US, severely affecting its revenue and profitability outlook.

The revised margin guidance for FY26 falls below JLR’s reported 8.5% EBIT margin for FY25. Additionally, after posting free cash flows of £1.5 billion for the fiscal year 2024-25, JLR anticipates a sharp drop to nearly zero in FY26. Despite these challenges, Tata Motors’ management remains cautiously optimistic, forecasting improvement in FY27 and FY28.

Jaguar Land Rover’s Contribution to Tata Motors’ Revenue and Profit

JLR plays a critical role in Tata Motors’ consolidated performance, accounting for approximately two-thirds of the company’s total revenue. In FY25, JLR contributed around 71% of Tata Motors’ revenue and 80% of its profitability, underscoring its significance to the group’s financial health.

Tata Motors Share Price Performance and Technical Outlook

In response to the revised guidance and tariff concerns, Tata Motors’ stock fell as much as 5.5% to a low of ₹672.75 on the Bombay Stock Exchange (BSE). From its 52-week high of ₹1,179.05, the stock has plummeted nearly 43%, reflecting substantial investor losses. Over the past year, Tata Motors shares have declined approximately 31.4%, and year-to-date (YTD), the stock is down by 9%. As of 10:27 am on Monday, the share price was trading at ₹681.90, down 4.3%.

Technical Analysis: Key Support and Resistance Levels

Jigar S Patel, Senior Manager of Technical Research at Anand Rathi Shares and Stock Brokers, commented on Tata Motors’ recent price action. He noted that the stock recently encountered resistance near the neckline of an inverse head and shoulders pattern, failing to sustain gains above the crucial ₹750 level.

Patel highlighted that the stock is currently sitting on the S3 Camarilla monthly pivot, a significant support zone. Immediate support is identified near ₹665, with resistance around ₹715. According to Patel, a decisive daily close above ₹715 would signal bullish momentum and potentially open the door for further gains. Until such confirmation occurs, he recommends caution for investors considering new long positions.

What Lies Ahead for Tata Motors?

Tata Motors faces a challenging environment shaped by geopolitical factors such as US tariffs, which continue to weigh heavily on JLR’s profitability outlook. However, the company’s long-term prospects depend heavily on how successfully it navigates these external pressures while maintaining operational efficiency.

Investors will be closely monitoring both fundamental developments regarding tariff negotiations and technical price action around critical support and resistance levels. The stock’s near-term direction remains uncertain, with key pivot points likely to dictate whether Tata Motors can regain lost ground.

Tata Motors shares fell over 5% as Jaguar Land Rover lowered its FY26 EBIT margin forecast to 5-7% due to US tariffs, sparking concerns about the company’s near-term profitability and stock performance.

Disclaimer: This article is for informational purposes only and does not constitute investment advice. Cryptocurrencies and stocks, particularly in micro-cap companies, are subject to significant volatility and risk. Please conduct thorough research before making any investment decisions.