Tata Motors on a bumpy road

Heading south JLR's Ebit margin and free cash flow are expected to take a beating in FY26.

- Pallavi Pengonda

Tata Motors Ltd has started FY26 on a bumpy road, with its key subsidiary Jaguar Land Rover (JLR) navigating multiple headwinds—from US tariffs and tough market conditions in China to uncertainty around the battery electric vehicle (BEV) transition.

It's not surprising, then, that at its latest investor day, JLR's management scaled back expectations on crucial parameters. It now expects an FY26 Ebit (earnings before interest and tax) margin of 5-7%, around 300-500 basis points lower than its earlier guidance of 10%.

This is also well below the 8.5% margin recorded in both FY24 and FY25, its strongest performance in recent years, according to the company's presentation.

"The margin guidance at the midpoint assumes that the US-UK trade deal will be effective from the date of announcement (8 May 2025) and that the US-EU deal will be signed before the end of the 90-day tariff pause (14 July 2025)," said a report by BNP Paribas Securities, adding, "Any delay on these deals poses a downside risk to the guidance."