Tata Motors Passenger Vehicles (TMPVL) has plunged 4.5%. The Q2 earnings have triggered investor worries on the back of margin pressure amid external headwinds. JLR faces multiple headwinds across regions. Motilal Oswal has turned cautious on the newly demerged PV business of the leading Tata Group stock .
According to the brokerage report, the stock now carries a Sell rating with a steep downside risk.
Motilal Oswal has set a target price of Rs 312, a valuation that indicates a potential 20% fall from current levels. The downgrade raised concerns around weak performance at Jaguar Land Rover (JLR), margin pressure, and muted outlook for the coming quarters.
Let’s take a look at the 5 key reasons why the brokerage is cautious on this stock –
1. Motilal Oswal on Tata Motors PV: Why the brokerage has turned cautious
Motilal Oswal’s view hinges mainly on JLR’s sharp slide in quarterly performance and the expectation that the weakness may not be a one-quarter event.
The company posted a consolidated loss of Rs 55,000 crore, dragged down by JLR’s extremely weak earnings, even as India’s PV business delivered in-line results.
The brokerage noted that JLR is navigating one of its toughest phases. The cyber incident, tariff-related hits, soft demand in key markets, and higher discounting have all weighed on profitability. As per the report, JLR’s EBITDA margin for the quarter came in at -1.6%, which the brokerage calls a multi-year low.
Motilal Oswal highlighted that management has already lowered expectations for the year. As per the brokerage report, “Given a significantly weak Q2 and a continued impact expected in Q3, management has sharply lowered its FY26 EBIT margin guidance to 0–2% and FCF at GBP -2.2 billion to -2.5 billion.”
2. Motilal Oswal on Tata Motors PV: Global weakness dragging JLR
JLR’s trouble is not limited to one-off operational issues. The brokerage says demand continues to remain soft in key regions. The report noted, “Demand continues to be weak in key regions including China, US and Europe and hence VME is likely to remain elevated, at least in the near term.”
Management also refrained from giving a detailed outlook for FY27 but hinted that the external environment may keep profitability under pressure. As the report mentioned, “Both US tariff increases and China’s luxury tax are likely to have a structural impact on medium-term profitability.”
Motilal Oswal has accordingly trimmed its future projections. It now expects JLR’s FY26 EBIT margin at 2% and sees it improving only gradually to 5% by FY28, compared to its earlier expectation of 6.5% for the same year.
3. Motilal Oswal on Tata Motors PV: Impact of production loss and the cyber incident
The brokerage’s analysis highlighted that the impact of the cyber incident is still unfolding across quarters. The report explained that JLR lost around 20,000 units in Q2 and expects another 30,000 units to be absorbed in Q3.
As stated in the report, “Q3 will also see some impact of the cyber incident although production has now normalised in November.”
The production hit has come at a time when pricing pressure and discounts are also rising. Higher warranty costs, lower engineering capitalisation, and spillover impact of US tariffs have further added to the margin squeeze.
4. Motilal Oswal on Tata Motors PV: India PV business stable, but not enough to offset JLR pressure
The domestic PV arm is performing broadly in line with expectations but t is relatively a smaller part of the overall valuation and therefore cannot offset the sharp deterioration at JLR. The brokerage maintains its valuation metric for the PV business at 15x EV/EBITDA.
The brokerage noted, “Given the significant challenges at JLR, we initiate coverage on the recently demerged India PV business with a Sell rating and a SoTP-based TP of Rs 312 per share.”
The brokerage has also lowered its target multiple for JLR from 2.5x EV/EBITDA to 2x.
5. Motilal Oswal on Tata Motors PV: What management expects ahead
Management expects the domestic PV industry to do better in the second half. It believes the market could end FY26 with mid-single-digit growth, supported by new launches and possible price hikes. However, it also noted that PV ICE profitability will remain muted for one more quarter due to competitive pricing and commodity inflation.
The company expects discount levels to ease in Q4 as the industry starts the new year with much lower stock levels.