It has been a strange year for Tata Motors. While shares of most passenger vehicle makers surged on hopes of a consumption recovery, the Tata Group company has gone the other way, sliding more than 12 per cent year-to-date, making it the worst-performing stock among passenger vehicle makers in 2025. In contrast, Maruti Suzuki has gained around 40 per cent, Mahindra & Mahindra about 22 per cent, and Hyundai Motor India nearly 30 per cent since January. Even commercial vehicle peers like Ashok Leyland and Escorts Kubota have gained 35 per cent and 10 per cent respectively this year. Over the past year, investors have favoured auto stocks as consumption began to revive. Further GST reforms ignited fresh growth. But Tata Motors has failed to ride the same wave.
Tata Motors underperformed largely because of a 3 per cent decline in domestic PV volumes in FY25, even as the overall PV industry grew by around 2 per cent. According to Sanket Kelaskar, auto analyst at Ashika Equities, the company lost market share across key models, especially in EVs, where competition intensified from new entrants like JSW-MG’s Windsor and Mahindra’s BEV range.
The company’s premium SUV portfolio also struggled to deliver, with rising dealer inventory and slower retail demand hurting volumes.
On the global side, JLR faced weak demand in China and Europe. Only North America held up briefly before tariffs hit margins, forcing JLR to cut its FY26 margin guidance due to high EV investments.
“While Tata Motors continues to lead the Indian EV market, intensifying competition has eroded its market share, leading to slower growth and a more cautious outlook. The company also faced multiple setbacks this year, including a major cyberattack, potential US tariff implications, and weakening demand from China and Europe, all of which weighed heavily on revenue and margins,” said Prashanth Tapse, Sr VP research Analyst at Mehta Equities.
Is it an undervalued play?
Despite this muted year, analysts believe most of Tata Motors near-term negatives are already priced into the stock. At around 9x its estimated FY26 earnings, Incred values Tata Motors at a steep discount to peers, Maruti Suzuki at 30x and Mahindra at 28x. Its price-to-book ratio is also much lower, at 1.9x versus 4.6x for Maruti and 5.6x for M&M.
“Tata Motors is trading at significantly lower valuation multiples across key parameters compared to peers such as Maruti Suzuki and M&M,” said Tapse.
“The stock appears attractively valued for long-term investors willing to look beyond near-term execution and global demand risks,” Kelaskar said.
Some analysts, however, caution that Tata Motors’ problem is not valuation but perception. Abhishek Jain, Head of Research, Arihant Capital Markets said the stock’s weak performance reflects investor scepticism about execution and profitability.
What could drive the next leg of growth?
The near-term outlook for India’s passenger vehicle industry remains strong. InCred expects PV sales volumes to rise by 8.4 per cent in FY26 and 16.7 per cent in FY27, supported by lower interest rates, and the expected Pay Commission payout in FY27. These triggers, combined with easing inflation and better rural demand, could drive a consumption-led rebound.
Tata Motors stands to benefit from this cycle, especially if its EV business regains momentum and JLR margins stabilise. The company’s new EV initiatives, such as extended warranties and expanding charging infrastructure, aim to strengthen customer confidence. New launches such as the Tata Sierra and JLR’s upcoming product pipeline could also support a gradual turnaround.
According to Kotak Equities, Tata’s domestic PV business is expected to post an 18 per cent EBITDA growth in Q2FY26, aided by cost control and a richer product mix. “Operating leverage benefits and strong SUV sales should offset commodity headwinds and higher advertising spends,” Kotak said in a preview note.
A stock for patient investors
At current levels, Tata Motors trades at a fraction of the valuations enjoyed by peers like Maruti or Hyundai. For value-focused investors, this is a tempting setup and analysts hint at accumulation gradually even though with a tinge of caution.
“Meaningful re-rating will depend on sustained improvement in JLR performance and renewed growth in domestic EV sales,” Jain said. Kelaskar of Ashika echoed a similar view, saying that while near-term headwinds persist, Tata Motors is better placed than before.
“For investors with patience and a long-term horizon, the current price levels look appealing, as much of the risk seems already priced in, especially with expectations of a full recovery in JLR and steady performance in the PV business. On the other hand, conservative investors may prefer to adopt a wait-and-watch approach, seeking more clarity on earnings growth and the company’s post-demerger business strategy before taking a position,” Tapse noted.
