Tata Motors shares rally 3% as investors eye dividend, JLR outlook ahead of Q4 results

Shares of Tata Motors climbed as much as 3.4% on Monday to Rs 732.55 on the BSE, extending last week’s rally as investors turned bullish ahead of the company’s fourth-quarter results and a likely dividend announcement. Optimism around Jaguar Land Rover’s performance, a proposed demerger, and recent global trade developments also contributed to the momentum.

With Monday’s move, Tata Motors shares have rallied over 13% in May, staging a sharp rebound of nearly 37% from their April 7 low of Rs 535.75.

Tata Motors is set to announce its earnings for the March quarter and full fiscal year on Tuesday, May 13. The Board of Directors will also consider a dividend proposal for FY25, the company said in a stock exchange filing.

JLR trade visibility lifts sentiment

Investor sentiment toward Tata Motors has improved following a series of positive developments related to Jaguar Land Rover (JLR), its wholly owned UK-based luxury vehicle subsidiary.

Last week, the UK and US governments announced progress on a bilateral trade agreement. Although final details are pending, the agreement includes a revised tariff regime for automobiles. Imports up to 1 lakh vehicles will now face a 10% duty, while those beyond that will continue to attract a 25% tariff. Previously, all UK-made vehicle exports to the U.S. were taxed at 25% after a hike from 2.5% in April.

While the 10% rate still represents a jump from the earlier 2.5%, it is a significant improvement over the blanket 25% tariff and may aid JLR’s margins, especially after the brand paused U.S. shipments in April. JLR had exported 1.02 lakh vehicles to the US in 2024.

Separately, a recently announced India-UK Free Trade Agreement is expected to reduce import duties on premium vehicles to 10% under a quota system. The agreement could “turbocharge” JLR’s India sales by improving pricing competitiveness and boosting volumes, according to analysts.

Solid JLR sales, demerger plan support rally

Tata Motors’ rally has also been underpinned by strong sales performance at JLR and a value-unlocking demerger proposal. JLR’s wholesale volumes for the March quarter rose 14.4% in North America and 10.9% in Europe, helping the brand reach a net cash positive position — a milestone under its “Reimagine” transformation strategy. Total volumes rose 6.7% sequentially and 1.1% year-on-year, despite softness in China.

Adding to the bullish narrative is Tata Motors’ plan to split its operations into two listed companies — one for commercial vehicles and another for passenger vehicles, electric vehicles, and JLR. The move is seen as a structural positive, enabling sharper business focus and agility.

Valuation rebound from April lows

Tata Motors stock has recovered swiftly from its recent lows, gaining over 21% in the past month and more than 30% since April 7. While the stock still trades below long-term moving averages such as the 100-day and 200-day SMAs, technical indicators like the 14-day Relative Strength Index (RSI) at 64.2 signal healthy buying interest without the stock being in overbought territory.

Also read | Tata Motors total sales down 6% to 72,753 units in April

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