Tata Motors, one of India's leading automobile manufacturers, has witnessed a sharp decline in its stock price in June 2025. The stock has fallen by over 5%, primarily due to concerns surrounding its UK-based luxury car subsidiary, Jaguar Land Rover (JLR).
Here are the Key Reasons Behind the Decline of Tata Motors Shares Are Falling in June 2025:
1. JLR’s Weak Financial Outlook
JLR has revised its EBIT margin guidance for FY26, lowering it to 5-7%, compared to the 8.5% margin reported in the previous financial year. This downgrade has raised concerns among investors, as JLR contributes 71% of Tata Motors' revenue and 80% of its overall profitability.
2. Free Cash Flow Concerns
JLR had reported a free cash flow of £1.5 billion in the previous financial year but now expects it to be close to zero in FY26. This has led to negative investor sentiment, impacting Tata Motors' stock price.
3. Impact of US Tariffs
The US has imposed a 25% tariff on imported vehicles, affecting JLR’s exports. This has forced JLR to pause shipments to the US, leading to revenue losses and further weakening its financial outlook.
4. Declining Domestic Demand
Tata Motors' passenger vehicle sales have dropped by 9% YoY, underperforming the industry growth rate of 3%. Rising fuel prices and increased competition from Maruti Suzuki’s CNG variants have contributed to this slowdown.
5. Semiconductor Shortages & Supply Chain Issues
JLR is facing semiconductor shortages, rising warranty costs, and supply chain disruptions, further pressuring its margins.
6. Market Performance & Investor Sentiment
Tata Motors' stock has fallen 42% from its 52-week high, reflecting investor concerns over profitability and future growth. Analysts have lowered their target prices, with some maintaining a neutral stance due to ongoing challenges.
The combination of JLR’s weak financial outlook, US tariffs, declining domestic demand, and supply chain disruptions has led to Tata Motors' stock decline in June 2025. Investors are closely monitoring JLR’s recovery plans and Tata Motors’ domestic strategy to assess future growth prospects.