Shares of Tata Motors Ltd. dropped by as much as 5% on Monday, June 16, after its luxury vehicle arm Jaguar Land Rover (JLR) issued a cautious outlook for the current financial year (FY26).
Weaker Profitability & Cash Flow Guidance
JLR expects its EBIT margin to fall to 5–7% for FY26, down from 8.5% last year. Additionally, the UK-based unit, which had reported £1.5 billion in free cash flow previously, now anticipates that figure to be “close to zero” this year.
Despite the dip, JLR management remains optimistic about the long term, aiming for:
- Free cash flow recovery starting FY27–28
- EBIT margin target of 10%, though no timeline has been provided
JLR’s Dominant Role in Tata Motors
In FY25, JLR was a major contributor, accounting for:
- 71% of Tata Motors’ total revenue
- 80% of the company’s overall profitability
Meanwhile, average revenue per vehicle stayed above £70,000, showing no year-on-year growth.
Trade, China Plans, and Market Position
On the trade front, JLR is in ongoing talks with the Trump administration, aiming to reduce tariffs on UK exports to the U.S., which currently stand at 27.5%—while tariffs on Slovakian exports remain unchanged.
Despite a challenging premium car market in FY25, JLR maintained its No.1 position in the premium segment as of May.
To strengthen its position in China, JLR plans to license the Freelander brand to its JV partner there. The first locally produced Freelander model is expected in H2 FY26.
Stock Market Impact
Following the update, Tata Motors shares slipped 4.6% to ₹679.65, making it the top loser on the Nifty 50 and among the biggest laggards on the Nifty 500.
Investors may remain cautious in the near term as JLR’s outlook signals a challenging road ahead, despite its long-term strategic efforts.
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