Jefferies retained its Underperform rating on the stock with a target price of Rs 310, noting that improved India PV prospects are unlikely to fully offset the drag from JLR. The brokerage fine-tuned its FY27 and FY28 estimates, raising forecasts for India PV while cutting projections for JLR.
While Q4 is expected to be better as production is likely to normalise in the March quarter as the cyberattack impact fades, Jefferies believes JLR continues to face several structural challenges that could weigh on profitability and growth.
The cyberattack significantly disrupted operations in the second half of CY25, reducing production by roughly 50,000 units, or about 12% of FY25 volumes. Although volumes may recover in the near term, the brokerage sees persistent headwinds including rising competition, higher consumption tax in China, elevated customer acquisition and warranty costs, and the ongoing transition toward battery electric vehicles.
In addition, key models such as Range Rover, Range Rover Sport, and Defender are now 3 to 5 years old. Jefferies noted that JLR’s break-even level has risen, with the business delivering an average EBITDA margin of just 3.6% in 9MFY26 on average quarterly volumes of 71,000 units, compared with over 9.6% margins in Q2 and Q3 FY22 at around 67,000 units per quarter. For FY26, JLR maintained its guidance of 0 to 2% EBIT margin and negative free cash flow of £2.2 billion to £2.5 billion. The company has deferred FY27 guidance to its June investor day, citing a business environment with more risks than opportunities.
On the domestic front, Jefferies remains constructive on India’s passenger vehicle segment, supported by tailwinds such as a recent GST cut, improving liquidity conditions, and upcoming government wage hikes. The international brokerage, however, cautioned that it is unlikely to offset the JLR drag.
Industry registration growth improved from 3% YoY during April to July to 15% YoY between August and January, and the brokerage expects an 8% industry CAGR over FY26 to FY28. Tata Motors’ passenger vehicle market share has recovered from 5% in FY16 to about 13 to 14% over FY23 to 9MFY26. The newly launched Sierra SUV has seen strong demand, with about 70,000 bookings on day one and a waiting period of 6 to 7 months, which should support growth.Jefferies expects Tata’s PV volumes to rise 18% YoY in FY26 and grow at an 11% CAGR over FY26 to FY28, with EBITDA margins improving toward 7.5 to 8.0% by FY27 to FY28. However, the brokerage remains cautious about the company achieving double-digit margins due to intense competition.
It expects FY27 and FY28 to be better than FY26 but estimates FY28 EPS to remain 26% below FY25 levels, with FY27 and FY28 EPS still 23 to 33% below Street expectations.
Tata Motors PV reported a consolidated loss of Rs 3,486 crore for the third quarter, compared with a profit of Rs 5,406 crore in the year-ago period. Revenue from operations declined 26% year-on-year (YoY) to Rs 70,108 crore.
The company said both revenue and profit were significantly impacted by the cyber incident at Jaguar Land Rover (JLR), though it expects a strong recovery in the fourth quarter. TMPVL reported an EBIT loss of Rs 3,300 crore during the quarter. Domestic operations improved sequentially, supported by higher volumes and incentives.
“Overall, it was a challenging quarter as anticipated on account of the carryover impact of Cyber Incident at JLR, while domestic business delivered robust revenue and margin improvement QoQ. We expect performance to significantly improve in Q4 with recovery at JLR and continuing growth in domestic market share,” said Dhiman Gupta, CFO, TMPVL.
Tata Motors PV shares tumbled as much as 3.4% to their day’s low of Rs 361 per share on the BSE.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)