Tata Motors shares drop 7% in 5 sessions

Time of India

4 hours ago

Tata Motors
' stock continued to slide following a weak financial and operational outlook issued by its UK-based subsidiary
Jaguar Land Rover
(JLR) for FY26. The company's shares fell 1 per cent to ₹679.20, marking a 7 per cent drop over the last five trading sessions, as investor sentiment turned cautious over economic challenges and global business headwinds, reports Financial Express.
At its recent investor day, JLR guided for a 5–7 per cent EBIT margin in FY26, down sharply from 8.5 per cent in FY25, and projected near-zero free cash flow, compared to £1.5 billion FCF recorded in FY25. It also expects a year-on-year revenue decline to £28 billion, compared to £29 billion in FY25, missing its earlier revenue growth guidance of 26per cent for FY26.
The revised forecast has prompted analysts and brokerages to lower earnings estimates, target prices, and recommendations.
Macro Headwinds and Industry Pressures Take a Toll
JLR outlined several business challenges affecting its outlook, which trade and technology protectionism, weaker dollar and tough macroeconomic conditions in China. Moreover, transition to
BEVs (Battery Electric Vehicles)
, stricter emission regulations and rising warranty costs have also weighed heavily on JLR's performance.
The luxury carmaker is also grappling with regulatory hurdles, such as the need to develop separate ADAS (Advanced Driver Assistance Systems) for the US and China markets, as well as slower BEV adoption amid consumer hesitancy and evolving global norms.
Brokerages React with Downgrades and Caution
Brokerage firm Jefferies cut its FY26-28 EPS estimates by 12-19 per cent and retained an 'Underperform' rating, citing the deteriorating margin outlook and soft free cash flow guidance. Nomura maintained a 'Neutral' stance with a target price of ₹800, noting that the guidance cut was in line with its expectations.
Nuvama Institutional Equities continued its 'Reduce' call with a target price of ₹670, highlighting modest 3 per cent CAGR in consolidated revenue and EBITDA over FY25–27.
To cushion the impact of global tariffs and protect margins, Tata Motors plans a significant cost reduction of £1.4 billion (around 5per cent of sales) over FY26–27. The company aims to achieve 10 per cent EBIT margin by FY27–28 and work towards a long-term target of 15 per cent EBIT margin. JLR also expects relief from potential US-UK trade deal, which could reduce tariffs from 27.5 per cent to 10 per cent, retroactively effective from May 2025.
Product Launches and Investments Continue
Despite current headwinds, Tata Motors is sticking to its investment target of £18 billion over five years. Key upcoming product launches include Range Rover EV, Freelander EV (under China JV CJLR) and New Jaguar EVs.
The automaker is also taking pricing actions in the US market to counterbalance import-related challenges and rising production costs.
Domestic CV and EV Segments Also Facing Pressure
Back home, demand in the commercial vehicle (CV) segment has slowed, while competition in the electric passenger vehicle (PV) space is intensifying, adding to Tata Motors' short-term operational concerns.
While the weaker FY26 guidance has sparked immediate concerns among investors and analysts, Tata Motors is betting on cost efficiency, regulatory relief, and future EV rollouts to regain growth momentum. However, success will depend on geopolitical developments, global
EV adoption trends
, and execution of cost-control measures in the face of an increasingly volatile global auto landscape.