Tata Motors extends its losses after its UK-based subsidiary, Jaguar and Land Rover (JLR), presented a weak outlook for FY26 and raised concerns about economic headwinds in key markets like China. The share price of Tata Motors fell 1% to trade at Rs 679.20. The carmaker’s stock has fallen 7% in the last five trading sessions.
Many brokerages, taking cognizance of the lower guidance, have undertaken cuts in target price and recommendation. Here is a look at the key concerns for the top brokerages-
Jefferies on Tata Motors: Cuts target price and other estimates
Jefferies said that JLR presented a weak outlook for FY26 at its investor day, with guidance of 5-7% EBIT margin (FY25 8.5%) and near-zero free cash flow (FCF). In FY25, the company reported an FCF of £1.5 billion. JLR remains focused on enhancing its brand proposition and internal cost controls.
Tata Motors expects a slight year-on-year decline in revenues to £28 billion in FY26, compared with FY25 £29 billion, along with a sharp fall in EBIT margin to 5-7% in FY26 from 8.5% in FY25. The automarker in 2024 guided for a growth of 26% for FY26. JLR highlighted multiple business challenges, including trade & technology protectionism, weaker USD, tough China macro, BEV transition, emission regulations and warranty costs. All these factors led Jefferies to cut FY26-28 EPS estimates by 12-19%, and retain ‘Under Perform’ rating on the stock.
Not just that, the Indian commercial vehicle (CV) demand has slowed down, and competition is rising in electric passenger vehicles (PVs).
Nomura on Tata Motors: Guidance cut in line with estimates
Nomura maintained its rating ‘Neutral’ on Tata Motors, with a target price of Rs 800. The brokerage said that the automaker’s guidance cut was in line with its estimates. Further, NOmmura said that to offset the tariff impact, Tata Motors plans a major cost reduction of £1.4 billion (5% of sales), which will be implemented over FY26-27. With this, the company plans to reach 10% EBIT margins by FY27-28, while the long-term aspiration remains 15% EBIT margin.
According to JLR’s management, the company is employing strategies to mitigate the US tariff risk. The US-UK trade deal would reduce tariffs from 27.5% to 10%. A US-UK trade agreement might be finalised very soon, according to management, and will be backdated to May 2025. The company is also taking pricing actions in the US market.
Nuvama on Tata Motors: Retains ‘Reduce’ rating
Nuvama Institutional Equities maintained its ‘Reduce’ call on Tata Motors and retained its target price of Rs 670. Further, the brokerage house expects a moderate consolidated revenue and EBITDA CAGR of 3% each over FY25–27. According to Nuvama, the company’s investment target of £18 billion over five years is unchanged. Plus, focus on cost savings—target of £1.4 billion/year—to be visible from the second half of FY26. JLR’s upcoming launches include RR EV, Freelander EV (in CJLR) and Jaguar EV, among others.
The company is not just facing geopolitical headwinds, but regulatory challenges also persist. For instance, ADAS systems for the US and China need to be separately developed. Battery Electric Vehicle (BEV) demand growth is restricted due to slower customer acceptance and regulatory uncertainties.