Shares slide for a fourth straight session as JLR guidance dampens optimism over auto tariff reprieve
Despite a potentially game-changing trade deal between the United Kingdom and the United States, Tata Motors is still grappling with bearish sentiment. The stock dropped again Tuesday, extending its losing streak to four days, as analysts lowered future earnings projections and cast doubt on Jaguar Land Rover’s near-term performance.
The US-UK pact — signed on the sidelines of the G7 summit — was expected to offer some relief to Tata’s British marquee unit, but the markets clearly weren’t impressed. In fact, JLR’s recent financial guidance seemed to override any positive vibes from the trade breakthrough.
A Deal Signed, But Not Enough to Impress the Street
At first glance, the overnight deal looked like good news for JLR. The United States agreed to slash import duties on British-made vehicles from a painful 27.5% to a more tolerable 10%, with a generous annual quota of 100,000 vehicles.
Yet Tata Motors’ stock still lost another 1.5% on Tuesday, continuing its week-long slump.
The reason? Timing and perception.
The market had already baked in some optimism about tariff relief weeks before the G7 summit. And JLR’s muted outlook managed to neutralize any fresh bullishness that might have emerged from the tariff cuts.
It didn’t help that the new 10% rate, while lower than the retaliatory tariffs imposed earlier, is still higher than the pre-dispute 2.5% import duty the US used to charge.
Analysts Start Trimming the Fat from EPS Projections
The reaction from brokerages has been swift. Jefferies downgraded Tata Motors, citing concerns over JLR’s volume growth and margin outlook.
Two major catalysts were flagged by Jefferies:
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The slower-than-expected EV adoption in Europe
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Margins being squeezed by input costs and high capital expenditure needs
As a result, the brokerage cut Tata’s EPS forecasts for FY26 to FY28 by 12% to 19%.
Meanwhile, CLSA stayed more upbeat, maintaining its “outperform” rating with a price target of ₹805. But even CLSA admitted that any meaningful profitability uptick from JLR would likely not come before FY27, hinging heavily on scale and cost savings.
What the Trade Deal Actually Promises
Now, let’s break down what the UK-US deal changes, and what it doesn’t.
Here’s a snapshot comparison of old and new tariff rates:
| Parameter | Before Trade War | Post Trade War | After New Deal |
|---|---|---|---|
| US Tariff on UK Auto Imports | 2.5% | 27.5% | 10% |
| UK Auto Quota (to US, per year) | No quota | No quota | 100,000 units |
| Other Product Tariffs (from UK) | 0-25% | Up to 25% | TBD |
While the change offers short-term relief, especially for JLR’s top-selling models in the US, the volume cap and lack of clarity on other goods leave much to be desired.
Basically, the deal is more of a bandage than a cure.
JLR’s Guidance: The Real Mood-Killer?
What really deflated sentiment was JLR’s latest guidance for the ongoing fiscal. The company was markedly conservative, painting a picture of flat volumes and slow growth in key markets.
A source close to the matter told Bloomberg, “They’re bracing for a lukewarm year and managing expectations accordingly. Tariff relief or not, they don’t see a huge pickup in US demand in the short run.”
Here’s the thing — Tata Motors shipped over 1.02 lakh vehicles to the US from the UK in 2024. That entire volume now falls under the quota limit. Still, there’s no big expansion opportunity if demand stays soft and the company remains in capital preservation mode.
Just one sentence: It feels like the stock is reacting less to trade policy and more to earnings reality.
Market Mood: Technicals, Sentiment, and Pain
Across the Nifty 50, Tata Motors was among the biggest laggards of the day.
This is how it stacks up:
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Down 1.5% on June 17
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Four-day losing streak
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Total drawdown of nearly 6.8% since June 13
And the pain may not be over yet.
Derivatives traders pointed to rising short interest and put accumulation around the ₹680–₹700 range. That could suggest more downside risk in the near term, especially if institutional investors continue trimming exposure.
What Next? Hope Rides on FY27 and Beyond
So what’s keeping bulls from totally jumping ship?
Two things: structural growth at JLR and India’s booming passenger car segment.
If JLR manages to hit scale in electric SUVs and navigate cost pressures over the next 18 months, CLSA believes FY27 could be a turning point. That’s a long wait though — especially in today’s twitchy market environment.
The Indian business, meanwhile, remains relatively solid, albeit not spectacular. Domestic sales haven’t cratered, and Tata’s dominance in the EV space still gives it a leg up on rivals like Mahindra and Hyundai.
Still, for now, the numbers don’t lie. Investors are in no mood to reward long-term potential without clearer near-term guidance.
