The analyst expects festive demand and moves such as the IVECO buyout to boost turnaround in the second half of the year.
Tata Motors shares gained nearly 1% on Monday as the street parsed its June quarter (Q1 FY26) earnings performance.
The auto major reported a 30% slump in consolidated net profit Q1 FY26, dragged by volume declines across most segments, and lower profitability at Jaguar Land Rover (JLR) due to tariffs imposed by US President Donald Trump. According to reports, the results are in line with street estimates.
Q1 Earnings Breakdown
Net profit stood at ₹3,924 crore, compared to ₹5,643 crore a year earlier, while revenue from operations slipped 2.5% to ₹1.04 lakh crore. EBITDA saw a sharp 36% decline to ₹9,700 crore. EBIT margin contracted 490 bps to 4%.
Commercial vehicle revenue fell 4.7% to ₹17,000 crore, though margins improved to 12.2% on better realizations and cost savings. Passenger vehicle sales were down 8.2% amid soft demand and model transitions.
JLR Performance
JLR’s revenue fell over 9% to £6.6 billion due to tariffs, which led to a temporary pause in shipments to the USA in April, as well as the planned wind-down of the legacy Jaguar cars.
JLR maintained its FY26 EBIT margin guidance at 5 – 7%, citing recent UK-US and EU-US trade deals that will lower tariffs on exports to the US. The EU‑US trade deal is expected to reduce tariffs on JLR’s EU‑produced vehicles exported to the US to 15%.
Tata Motors kept JLR’s fiscal 2026 earnings before interest and taxes margins forecast unchanged at 5% – 7%.
Analyst Take
Tata Motors delivered a mixed Q1 FY26 performance, remaining profitable, but facing margin pressures across segments, particularly at JLR, along with negative free cash flow that dampened sentiment, said SEBI-registered analyst Saurabh Sahu.
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However, strategic initiatives such as the IVECO acquisition and the planned demerger remain key drivers for long-term value creation, he added.
Sahu highlighted JLR’s margin recovery amid trade headwinds, a turnaround in passenger vehicle profitability, and free cash flow improvement in the second half on festive demand as key factors to watch.
Tata Motors expects to complete the demerger of its PV and CV businesses by October 1, with NCLT’s order awaited.
Brokerage Actions
According to reports, Jefferies downgraded Tata Motors to ‘underperform’ and cut its target price to ₹550, citing rising competition, taxes in China, warranty costs, aging JLR models, market share losses in passenger vehicles, and weak commercial vehicle demand.
Nuvama lowered its target to ₹610 with a ‘reduce’ call, due to expectations of muted growth, forecasting just 1% CAGR for JLR and CVs.
Motilal Oswal maintained a ‘neutral’ rating and a ₹631 target, flagging tariff risks, weak global demand, and persistent margin pressure.
In contrast, Emkay Global retained a ‘buy’ rating with a ₹750 target, highlighting JLR’s improved profitability, stronger balance sheet, and £1.4 billion annual cost savings.
Retail Sentiment
Tata Motors was among the top three most trending stocks on Stocktwits with ‘high’ retail chatter. Sentiment on the platform was ‘bearish’. It was ‘neutral’ a day earlier.
The stock has shed nearly 15% year-to-date.
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