Additionally, the pressure of US President Donald Trump’s 25% reciprocal tariffs weighed in on the sentiment, pushing the stock down.
Here are the details:
Trump tariffs
The US administration’s sudden announcement of a 25% tariff on all Indian imports, starting August 1, appears to have injected some volatility into the Indian markets, affecting export-driven sectors to the US, such as the pharmaceutical and automotive industries, among others.
While automobiles and auto parts are mostly exempt under Section 232 provisions, Indian auto component manufacturers remain vulnerable to shifts in U.S. demand cycles.
“Sectors under ongoing Section 232 investigation (pharmaceuticals, semiconductors & electronics, among others) are currently exempt from reciprocal tariffs, while existing Section 232 tariffs will apply on steel & aluminum (50%) and autos – finished and parts (25%),” analysts at Nomura said.
Tata Motors incorporates new subsidiary
At its board meeting held on July 30, the company approved the formation of TML CV Holdings, which will be a step-down subsidiary under TML CV Holdings, Singapore.
The new entity, to be incorporated in the Netherlands, will function as a holding company and will focus on managing participations and interests in global businesses, legal entities, and companies.
The subsidiary will be incorporated with 100% shareholding retained by TML CV Holdings, and shares will be subscribed to at par value in cash. The new structure is seen as part of Tata Motors’ broader efforts to strengthen its global CV footprint.
On Wednesday, Tata Motors shares closed 3.5% lower at Rs 668.40 on the BSE.
What brokerages say?
Domestic brokerage firm Nuvama maintained a “Reduce” rating on Tata Motors with a target price of Rs 670, but acknowledged the potential upside from Tata Motors’ global CV ambitions.
The brokerage highlighted the company’s proposed acquisition of Iveco’s ex-defence business for €3.8 billion, stating that the deal is expected to boost Tata Motors’ international CV presence.
The acquisition implies a 4x CY24 EV/EBITDA valuation, and is estimated to be EPS accretive by 4% on a consolidated basis. Nuvama also sees a fair value upside of 2% from the deal using similar valuation multiples. However, it flagged a key risk—a potential down-cycle in commercial vehicle demand in the EU and US markets, which could pressure near-term earnings.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)
