The steep decline came even after Tata Motors said on Tuesday fiscal fourth quarter net profit had more than doubled, as it had been driven by a one-off tax gain.
Instead, investors focused on the fall of operating margins at the luxury unit from 20.1 percent to 14.6 on a quarter-to-quarter basis.
Several analysts downgraded their estimates for the auto maker on Wednesday, expressing concerns about the sales outlook for JLR, which accounted for more than 95 percent of its net profit in the latest quarter, and about domestic sales for Tata models.
Steep gains in Tata Motors shares this year, with the auto maker up 54 percent in 2012 as of Tuesday's close, magnified the falls, traders said.
"Overall earnings were in line with expectations but the mix was adverse as India business rebound looks unsustainable given unfavourable macro," Morgan Stanley said in a note.
The bank cut its price target for Tata to 291 rupees from 313 rupees. UBS also cut its 12-month price target to 270 rupees from 320 rupees and maintained its "sell" rating on the stock.
Shares in the carmaker were down 11.4 percent at 244.35 rupees as of 2:29 p.m. in heavy volumes.
Tata Motors shares had been on a roll this year as investors had banked on Jaguar Land Rover, which the carmaker bought for $2.8 billion in 2008, to drive profit growth.
Boosted mainly by strong demand in China and other emerging markets, JLR's sales volumes have soared 29 percent over the past 12 months.
However, doubts about the outlook for the luxury unit had started emerging two weeks ago when Tata Motors posted flat global sales in April.
Tata is also facing a challenging domestic sale environment, according to a UBS report on Wednesday, which warned that India's slowing economic growth would challenge auto makers.
Auto makers had seen domestic sales surge before mid-March, as consumers frontloaded their purchases ahead of the unveiling of the federal budget for the 2012/13 that, as widely expected, raised excise duties for vehicles.
Copyright Thomson Reuters 2012