Tata Motors Passenger Vehicles remains one of the most closely tracked automobile companies in the market. This is largely because of its exposure to both the domestic passenger vehicle business and luxury vehicle maker Jaguar Land Rover (JLR).
The global brokerage house Jefferies has retained its ‘Underperform’ rating on Tata Motors Passenger Vehicles and assigned a target price of Rs 300 per share. This implies a downside of around 21% from current levels.
According to the brokerage report, the concerns stem from a combination of product strategy shifts, rising costs and the growing financial implications of the company’s large investment cycle.
Let’s take a look at the three major factors behind Jefferies’ cautious stance –
Tata Motors PV: Why Jefferies remains cautious
According to the Jefferies report, Tata Motors Passenger Vehicles continues to face pressure from developments at Jaguar Land Rover, which remains a significant earnings contributor.
Jefferies noted that JLR’s FY26 annual report highlighted a “tough business environment”.This is marked by geopolitical uncertainty, tariff-related issues, changing regulations and increasing competition from Chinese automobile manufacturers.
The brokerage added that “electrification remains central to JLR” but the company is now “adjusting its EV-centric product strategy to incorporate ICE/hybrids.”
Rising warranty costs and lower depreciation
The second major concern highlighted by Jefferies relates to the company’s financial metrics.
The brokerage house Jefferies in its report added that the warranty expenses have increased significantly in recent years. JLR’s warranty cost as a percentage of sales has climbed to 6.6% in FY26, which Jefferies described as a “15-year-high.”
At the same time, depreciation expenses have moved in the opposite direction.
The brokerage noted that depreciation has fallen to an “11-year low” and highlighted that both the depreciation rate on Property, Plant and Equipment (PP&E) and the amortisation rate on intangible assets have dropped to “15-year lows in FY26.”
As per Jefferies report, lower depreciation has helped support operating profitability. However, the brokerage believes this benefit may not continue indefinitely as the company begins capitalising and launching new projects.
Key financial trends highlighted by Jefferies
| Metric | Observation |
| Warranty Expense | 6.6% of sales in FY26 |
| Warranty Trend | 15-year high |
| Depreciation Expense | £1.4 billion |
| Depreciation Trend | 11-year low |
| CWIP Share of Assets | 31% of total assets |
JLR: Massive investments a concern?
Another issue drawing attention is the sharp increase in ongoing investments.
According to the brokerage report, JLR has invested approximately £10.6 billion over the last three financial years across research and development activities and capital expenditure.
A large portion of this spending remains classified as Construction Work-in-Progress (CWIP) and product development in progress.
Jefferies highlighted that JLR’s “CWIP is up 6x over FY23-26 to £8 billion.”
The brokerage believes these investments could eventually result in higher depreciation charges as new products enter production, particularly with the planned launch of the Range Rover Electric Vehicle in the second half of FY27.
The report also noted that several global automobile manufacturers have recently taken sizeable write-offs on electric vehicle investments.
What investors need to know
According to Jefferies, FY27 and FY28 could improve compared to the cyberattack-affected FY26. However, the brokerage still expects earnings during FY27 and FY28 to remain below FY25 levels.
The brokerage stated that “India PV is performing well but is unlikely to offset the JLR drag.”
Jefferies also pointed out that some of JLR’s key models, including Range Rover, Range Rover Sport and Defender, are now several years into their lifecycle and could face increasing competitive pressure.
Disclaimer: The analysis, views, and market predictions contained in this report are based on institutional brokerage commentary and do not constitute an offer, solicitation, or direct recommendation to buy, sell, or hold any security. Investors are advised to consult a SEBI-registered financial advisor before making any investment decisions based on stock ratings or price targets. This disclaimer has been generated using AI to support user well-being and responsible content consumption.