Tata Motors Shares Gets HDFC Securities 'Reduce' As It Remains Cautious On The JLR Segment In The Near Term

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HDFC Securities Institutional Equities

Tata Motors Ltd. held Jaguar Land Rover’s Investor Day on June 16, 2025 to share its future strategy and measures to tackle ongoing business volatility. Management guided for an FY26 Ebit margin of 5-7% for JLR. This is in light of tariff uncertainty and a challenging business environment. It has announced enterprise missions to deliver benefits of £1.4 billion per annum, offset tariff-related costs, forex headwinds, and the slowdown in China.

Management believes that this will also allow JLR to return to 10% Ebit margin over the medium term.

A key positive was that management has reiterated its long-term guidance of achieving 15% Ebit margin for JLR. Another guidance for FY26 is that it expects free cash flow to be near zero.

Considering the challenging and uncertain business environment, we remain cautious on the JLR segment in the near term. We roll forward our valuation to Jun-27 estimates and value the company on a SOTP basis for a target price of Rs.681; we maintain a Reduce rating.

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