Tata Motors PV Shares Plunge as JLR Woes Trigger One of Its Weakest Quarters | Explained

Shares of Tata Motors Passenger Vehicles Ltd (TMPV) on Monday tumbled about 6% in early trade after analysts turned bearish on the newly demerged entity. Several brokerages gave negative ratings to TMPV shares after it reported a 13.5% decline in Q2 FY26 sales on Friday.

In the quarter ending September 30, 2025, the automaker sold only 723,490 cars compared to 876,770 units in Q1 FY26 and 836,560 units in Q2 FY25.

Motilal Oswal Financial Services termed TMPV’s Q2 performance “one of its worst financial performances in recent times.”

It issued a sell call for market investors. The brokerage is not alone. JM Financial has also given a reduce rating for the TMPV stock, which was recently renamed as a separate entity of Tata Motors after its split into passenger vehicle and commercial vehicle units. Jefferies also expects the new stock to underperform, Goldman Sachs has given it a Neutral rating, while CLSA expects it to outperform.

At 12:21 pm, TMPV shares were down 4.49% at ₹374 on the BSE.

Why did TMPV Shares fall after Q2 results?

The firm recorded consolidated revenue that dropped 14% year-on-year to ₹72,350 crore during the second quarter, along with a consolidated EBITDA loss of ₹1,400 crore, mainly because of weak performance at Jaguar Land Rover.

The British luxury carmaker unit of Tata Motors was hit by a cyberattack that halted production for several weeks and impacted earnings. JLR’s revenue declined 24% year-on-year to £4.9 billion, driven by a 24% fall in volumes and almost no change in realisations.

JLR posted an EBITDA loss of GBP 78 million. The decline was caused by the impact of the cyberattack that disrupted production, higher US tariffs, and the company absorbing China’s luxury tax, analysts noted.

In India, passenger vehicle revenue rose 17% to ₹13,740 crore because of a 7% increase in volumes and a 9% rise in realisations. EBITDA grew 9% year-on-year to ₹790 crore.

How the JLR cyberattack affect TMPV Q2?

The unit, which brings in the majority of Tata Motors PV’s earnings, reported an EBIT margin decline to negative 8.6%, dropping 1,370 bps year-on-year and 1,260 bps quarter-on-quarter. This was mainly due to lost production, tariff-related costs of £74 million, unfavourable foreign exchange impacts of £237 million, and higher warranty expenses. Free cash flow also turned negative at £791 million in Q2 because production was halted.

JLR said sales in the EU are still uncertain, while the UK market is steady. Demand in the US remains weak because of tariff issues, and in China, the lower luxury tax threshold (from RMB 1.3 million to RMB 0.9 million) has further hurt demand. JLR is expected to absorb this added cost for now. The company also indicated that marketing expenses will stay high. Some tariff relief is expected in Q3, as most of Q2 was impacted by higher tariffs. But overall, geopolitical tensions, tariff uncertainty, and supply chain risks continue.

Because of these challenges and the cyberattack’s impact, JLR has reduced its margin guidance. It now expects FY26 EBIT between 0% and 2% (earlier 5%–7%) and negative free cash flow of £2.2–£2.5 billion (earlier guidance was near zero).

JLR’s Challenges

While Tata Motors’ India PV business is expected to benefit from recent GST cuts, the company’s management has noted that JLR continues to face major headwinds in its key markets, beyond the recent cyber incident.

JLR management has indicated that Q3 will also see some impact from the cyber attack, even though production stabilised in November. October output was only 17,000 units. After losing 20,000 units of production in Q2, JLR has lost another 30,000 units in Q3. With a significantly weak Q2 and continued disruption expected in Q3, the company has sharply reduced its FY26 EBIT margin guidance.

According to analysts, the bigger concern is persistently weak demand in key markets such as China, the US and Europe. This is likely to keep marketing expenses elevated in the near term.

China’s luxury market is contracting after the luxury-tax threshold was lowered from RMB 1.3 million to RMB 0.9 million. Europe is struggling with macroeconomic pressures, while US demand, though stable, is not strong enough to absorb global output.

In the US, tariffs on imports from the EU and UK fell in Q2, from 25% in Q1 to 15% for the EU and 10% for the UK, resulting in a Q2 impact of £74 million.

A reset of US federal CAFE targets to zero also delivered a favourable £73 million gain, recorded under other expenses. Meanwhile, variable marketing costs are rising globally, with spending per car increasing from 4% to 6.9%, driven by China’s tax changes, softer demand, and pressure on the dealer network.

The company has signalled that both higher US tariffs and China’s luxury-tax changes are likely to have a lasting impact on medium-term profitability.

Tata Motors PV’s Reliance on the CV Unit

The subdued earnings from Tata Motors PV follow the November 12 stock-market listing of its sister entity, Tata Motors Commercial Vehicles. During the listing ceremony, Tata Motors Chair N. Chandrasekaran noted that the PV arm had long relied on support from the commercial vehicle business.

“There was always support for Tata Motors Passenger Vehicles from the performance of Tata Motors Commercial Vehicles. Cash flows came from commercial vehicles and were absorbed into the capital expenditure of the passenger vehicle business. We had to make sure both companies were fit, and we decided that both needed to be strong in their own right,” he said.

He explained that the idea of separating the two units was first discussed in 2017–18, but the Covid-19 pandemic disrupted the plan. The proposal was revisited and revived a couple of years ago.