Given the headwinds Jaguar Land Rover is facing globally, Tata Motors' management has lowered its Ebit margin guidance for FY26 to 5-7% from 10% (8.5% reported in FY25). This would entail a reduced revenue guidance of £28 billion (earlier >£30 billion).
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Considering the headwinds Tata Motors Ltd. is facing, management has lowered its Ebit margin guidance for FY26 to 5-7% from 10% earlier. As a result, it has reduced its free cash flow guidance to nil from £1.8 billion earlier.
Management has also indicated that Tata Motors is working to improve efficiencies across the firm, with specific enterprise missions to drive the firm's transformation amid headwinds. These initiatives should result in cost savings of £1.4 billion p.a. during H2 FY26 to FY27-28 and help Tata Motors to return to its earlier target of 10% Ebit margin over time.
While our estimates were already lower than the consensus, we have reduced our FY26 Ebit margin estimate for JLR to 6% (from 6.9%), which has led to a 10% cut in our FY26 earnings estimates. We have maintained our FY27 estimates at this stage.
For the lack of any triggers, we reiterate Neutral with FY27E SOTP-based target price of Rs 690.
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