Analysts at UBS have given automaker Tata Motors a “sell” rating, saying the electrification of premium cars is a bigger risk than the market thinks and that the automobile firm’s domestic market share is nearing its peak as competition heats up.

What Happened? Analysts at UBS restarted their coverage of the Tata stock saying that investors may be overlooking how electrification in the global premium car market may hit Jaguar Land Rover. However, the brokerage raised its price target for Tata Motors to ₹450 from ₹320.

The analysts said that Tata Motor’s 23% outperformance over the S&P BSE Auto index this year following JLR’s robust earnings was driven by an unsustainable mix and limited discounts and will be short-lived.

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UBS underlined how electrification in China has hit the bottom lines of premium brands worldwide, and anticipates a similar trend in other regions. It expects JLR’s margins to slip to around 4% by FY26, which is much lower than the company’s medium-term target of double-digit EBIT margins.

UBS also sees Tata’s market share in India’s personal vehicle segment peaking due to a relatively weaker launch pipeline than market leader Maruti, in conjunction with increasing competition in the electric vehicle (EV) market.

UBS also noted that Tata’s competitors have strong EV launch pipelines, which weighs on Tata’s EV valuation.

Price Action: Tata Motors’ share price was down nearly 2% at ₹510 around midday on Thursday.

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