Demand, margin concerns likely to weigh on Tata Motors in near term

The prospects are good enough for analysts to marginally hike EPS estimates by 3 per cent or so for FY25. The stock trades at an estimated 19-20x of FY25 estimated EPS.

Tata Motors reported a strong performance in the April-June quarter (Q1) of FY25, but the company also issued caution over supply constraints. That led to a selloff in the stock. 

The Ebitda margin expanded 110 basis points (bps) year-on-year (Y-o-Y) to 14.4 per cent, better than estimated, driven by a good show from Jaguar Land Rover (JLR). But India's passenger vehicle (PV) business margin missed estimates.

Apart from subdued global demand and margin headwinds at its UK-based multinational auto subsidiary JLR, recent supplier-based constraints may be an issue in the near term. Coupled with demand moderation in