Tata Motors shares slide 5%, become top Nifty loser after JLR flags flat cashflow and lower margins for FY26
Tata Motors' share price experienced a dip following Jaguar Land Rover's (JLR) announcement of weaker financial performance projections for the current fiscal year, including lower EBIT margins and reduced free cash flow. Despite this, Moody's affirmed Tata Motors' rating and upgraded JLR's, acknowledging the company's improving credit profile and strategic importance.
Tired of too many ads?
Remove Ads
Tired of too many ads?
Remove Ads
Tired of too many ads?
Remove Ads
Shares of Tata Motors slipped as much as 5.2% on Monday to Rs 674.70 on BSE after Jaguar Land Rover (JLR), its UK-based subsidiary, flagged weaker financial performance for the current fiscal year, triggering market jitters.The premium carmaker expects its EBIT margin for FY26 to range between 5% and 7%, significantly lower than the 8.5% margin reported in the previous fiscal. The company also projected free cash flow to be "close to zero" this year, compared to the robust £1.5 billion it generated last year.While JLR management said it is targeting a return to 10% EBIT margins and a pickup in free cash flow in FY27 and FY28, it did not provide a definitive timeline for achieving those targets.For Tata Motors, JLR's performance is critical. In FY25, the luxury car unit accounted for 71% of Tata Motors' revenue and contributed 80% of the group's overall profitability. Despite strong volumes, JLR's average revenue per unit remained flat year-on-year, staying above £70,000.Amid broader headwinds in the premium car market during FY25, JLR maintained its leadership. The company said it 'outperformed the market and maintained its No.1 position in the premium segment in May.'However, Moody's Ratings affirmed the automaker's Ba1 corporate family rating (CFR) with a positive outlook, while upgrading the ratings of its UK-based subsidiary, Jaguar Land Rover Automotive Plc (JLR).Moody's raised JLR's corporate family rating to Ba1 from Ba2 and its probability of default rating (PDR) to Ba1-PD from Ba2-PD, reflecting the improving credit profile of both Tata Motors and its luxury vehicle arm."The affirmation reflects the sustained strengthening in TML's consolidated credit profile driven by gross debt reduction and earnings expansion, which are accelerating deleveraging even as the global automotive industry faces challenging conditions," says Kaustubh Chaubal, a Moody's Ratings Senior Vice President."Concurrently, we have upgraded JLR's backed senior unsecured instrument ratings to Ba1 from Ba2. The outlook remains positive," a company filing said, quoting the rating agency.According to Moody's Ratings, Tata Motors Ba1 Corporate Family Rating (CFR) is a reflection of several key credit strengths. The rating agency highlights TML's robust global presence in the luxury automotive segment through its wholly-owned subsidiary, Jaguar Land Rover Automotive Plc (JLR, Ba1 positive). Moody's also points to TML's leading market position in India across commercial vehicles (CVs) and its growing share in passenger vehicles (PVs).Furthermore, Moody's credits TML's commitment to creditor-friendly financial policies that effectively balance growth with financial discipline, thus supporting a solid credit profile. The rating agency also acknowledges a long-standing, strategically important relationship with its parent, Tata Sons. This relationship, according to Moody's, results in a one-notch uplift to TML's rating due to the expectation of extraordinary support, should it be required.Moody's also notes that TML is currently in the process of demerging its CV operations into a separately listed entity with mirror shareholding. Post-demerger, which Moody's expects to be effective in October, the rated entity will encompass all PV and PV-related businesses, including 100% ownership of JLR. The rating agency anticipates that following this transaction, JLR will contribute over 90% of TML's consolidated EBITDA, underscoring the increasing convergence of their credit fundamentals. .. Tata Motors shares have declined 28% over the past 12 months, though they have gained 75% over the last three years. The company's current market capitalisation stands at Rs 1,48,943 crore.: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of the Economic Times)
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
&w=3840&q=100)
Business Standard
5 minutes ago
- Business Standard
Increased I-T scrutiny: NGOs, HNIs, and past cases under the scanner
The Central Board of Direct Taxes (CBDT) has issued fresh guidelines on selection of entities and people for complete scrutiny, including cancelled NGO registrations, repeated large tax additions, and inputs from investigative agencies for income-tax returns during financial year 2025-26 (FY26). According to tax experts, the move could cover a wide spectrum of taxpayers, from high-net-worth individuals to charitable institutions, if certain triggers are met. Who will be scrutinised? According to the CBDT Instruction, the following cases must be compulsorily selected for scrutiny under Section 143(2) of the Income Tax Act by June 30, 2025: Taxpayers covered under survey operations (Section 133A) after April 1, 2023. Entities subject to search or seizure (Sections 132/132A) between April 1, 2023, and April 1, 2025. NGOs and institutions whose registrations under Section 12A/12AB or 10(23C) were revoked before March 31, 2024. Cases involving specific information about tax evasion from agencies like the CBI, ED, or regulators. Recurring additions of Rs 50 lakh+ (metros) or Rs 20 lakh+ (non-metros) in earlier years, if not appealed or upheld by tax tribunals. 'There is no way to avoid a compulsory scrutiny if your case fits the checklist in this circular,' said Vivek Jalan, partner at Tax Connect Advisory. 'The taxpayer's file will be mandatorily picked. Preparing all documents early is the best defence,' he said. Impact on individuals, small businesses, NGOs Ashish Mehta, partner at Khaitan & Co, cautions that salaried individuals and small businesses may not be exempt. 'Even cases involving small taxpayers or HNIs can be picked if credible tax-evasion information is received from enforcement agencies,' he noted. NGOs or charitable institutions whose registrations have been cancelled should act quickly. 'They must appeal such cancellation orders before the Income Tax Appellate Tribunal or consider the writ route to prevent automatic scrutiny,' Mehta added. He pointed out that such scrutiny will not apply if the cancellation was later reversed in appeal. Why are past additions targeted? Taxpayers who have had large additions in earlier years, especially those not appealed, are again under scrutiny. 'Such cases are enforceable and often accepted, making them low-hanging fruit for the department,' Mehta explained. Notably, the monetary thresholds have doubled from last year's Rs 25 lakh and Rs 10 lakh for metros and non-metros, respectively, to Rs 50 lakh and Rs 20 lakh. Hitesh Sawhney, partner at Price Waterhouse & Co. LLP, noted, 'Recent guidelines issued by the Indian tax department for the financial year 2025-26 underscore a heightened focus on compliance and accurate reporting. While salaried taxpayers may remain largely unaffected, those with complex financial portfolios or recurring discrepancies face increased scrutiny. NGOs with cancelled registrations are advised to maintain robust documentation to support their tax exemption claims.' He added that the emphasis on recurring additions of Rs 50 lakh in metros and Rs 20 lakh in non-metros reflects 'a strategic approach to address persistent non-compliance.' CASS vs. Compulsory Scrutiny: Know the Difference While many taxpayers fear notices due to Annual Information Statement (AIS) mismatches, these do not fall under compulsory scrutiny. 'CASS (Computer Aided Scrutiny Selection) uses algorithms and analytics to flag data mismatches. The current guidelines apply only to specific high-risk cases such as search, survey, or cancellation of registrations,' clarified Mehta. Bottom line If your return matches any of the CBDT's compulsory criteria, scrutiny is unavoidable. Experts advise staying informed, preparing all paperwork in advance, and seeking legal recourse if needed, especially in case of cancelled exemptions or repeated additions.
&w=3840&q=100)
Business Standard
5 minutes ago
- Business Standard
Recognition at work boosts performance, loyalty and trust, finds study
Due recognition of work by a company always motivates its employees to perform better, builds trust and gives them a sense of belonging to the organisation, a study by two HR technology firms said. Guwahati-based Vantage Circle and Mumbai's 'Great Place To Work India' have jointly published a research report, 'The Recognition Effect: A Leadership Blueprint for Emotionally Intelligent Workplaces', which uncovers how recognition of efforts, when done right, becomes a transformative force for workplace culture and performance. "At the heart of the study lies a powerful finding: recognition isn't just about acknowledgement, it is a strategic lever for trust, agility, innovation and retention. Organisations that build high-recognition cultures outperform their peers across multiple dimensions of employee and business outcomes," the study mentioned. In such a scenario, 91 per cent of employees surveyed feel motivated, 94 per cent say their organisation is a great place to work, and an equally high percentage affirms that their companies deliver excellent customer services, it added. "Nearly all respondents in such environments also associate their organisation with innovation and express a strong intent to stay," the paper stated. The research also brings to light how recognition of work is experienced across gender, generations, roles and tenure -- signalling the need for more inclusive approaches. Commenting on the findings, Vantage Circle CEO and Co-founder Partha Neog said, "The true power of recognition and rewards lies not in what is given, but in what is genuinely felt. When done with intention, recognition becomes more than a moment -- it becomes a cultural signal that shows people they matter." Due recognition of an employee's work builds trust, pride and belonging for the organisation, he said. "We believe that a culture of recognition develops engaged and loyal employees. When organisations make employee appreciation an intentional and integral part of workplace culture, they unlock the true potential of their people," Great Place To Work India Chief Executive Officer Balbir Singh said. Recognition in the workplace helps employees see that their company values them and their contributions, fostering loyalty and engagement, he added. "Recognition programmes are a crucial part of the employee experience and a key driver of perceptions of fairness in the workforce, Singh said.
Hans India
9 minutes ago
- Hans India
Central PSEs contribution to India's financial resources sees 120 pc surge in 11 years
The Central Public Sector Enterprises (CPSEs) have contributed a record Rs 4.85 lakh crore to India's financial resources in FY2023- 2024, a 120 per cent increase from Rs 2.20 lakh crore in FY 2013-2014, the Finance Ministry said on Monday. The Central government's resource optimisation measures have borne fruit, according to a ministry post on social media platform X. "In FY 2023-24, the total contribution by the Central Public Sector Enterprises (CPSEs) to the Central Exchequer was Rs 4.85 lakh crore, a phenomenal increase of 120 per cent from Rs 2.20 lakh crore in the FY 2013-14," said the ministry. Last week, Union Finance Minister Nirmala Sitharaman received a dividend cheque of Rs 8,076.84 crore on behalf of the government from the State Bank of India (SBI) for the financial year 2024-25. Leading public sector companies in the financial, power and energy sectors recorded a strong growth in profit in Q4 FY25. The country's largest lender, SBI and insurance giant Life Insurance Corporation of India (LIC) led the charge with a net profit of Rs 18,643 crore and Rs 19,013 crore, respectively. The SBI's net profit for the financial year 2024-25 has now soared to Rs 70,901 crore, while the LIC has recorded an impressive net profit of Rs 48,151 crore for the year. Coal India earned a net profit of Rs 9,604 crore during the fourth quarter, while Indian Oil Corporation (IOC) registered a net profit of Rs 7,265 crore, with upstream oil exploration giant ONGC registering a net profit of Rs 6,448 crore during the quarter. NTPC recorded a net profit of Rs 7,897 crore while Power Finance Corporation (PFC), which also comes under the Ministry of Power, earned a robust Rs 8,358 crore. Power Grid Corporation of India also registered a strong profit of Rs 4,143 crore during the January-March quarter. The Prime Minister Narendra Modi-led government has strengthened India's PSUs in the last 11 years, turning them into wealth creators and making them integral to the nation's growth. With focused reforms, strategic autonomy, and capital support, PSU market cap surged across the energy, power, and infrastructure sectors.
