Tata Motors' JLR Continues To Face Headwinds; Motilal Oswal Stays Neutral On The Stock

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Motilal Oswal Report

We attended Tata Motors Ltd.’s analyst meet hosted by the management to give updates on various business segments. The company’s India PV segment is witnessing a pickup in demand after GST rate cuts, and management expects the segment to post 8- 10% growth in H2 FY26. Moreover, Tata Motors expects to outperform the overall domestic PV segment on the back of its new model launches, leadership in the compact SUV segment, and rising demand for its EV and CNG variants.

In CVs, management expects demand to pick up in H2, backed by increased consumption and improving profitability of fleet operators. Synergy benefits with IVECO include complementary product and regional mix and commonality of sourcing and scale benefits.

The demerger process is on track, with the effective date of Oct 1, 2025. After the completion of all formalities, its PV entity is likely to get listed first, followed by the CV entity.

At JLR, the cyber incident has disrupted production for most of Sep’25, and hence it has lined up funding lines to ensure that sufficient working capital is available at all times.

While JLR has now indicated a phased production start, it is likely to take some time for production to return to normalcy. Nonetheless, JLR is facing several headwinds, which include:

1. tariff-led slowdown for exports to the US;

2. demand weakness in key regions like Europe and China; and

3. rising VME, warranty and emission costs. For the lack of any triggers, we reiterate our Neutral rating on Tata Motors with Sep’27E SoTP-based target price of Rs 686.

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