JLR remains a key pillar of Tata Motors’ earnings, contributing 71% of the group’s revenue and 80% of its overall profitability in FY25
Shares of Tata Motors slipped as much as 5% on June 16 after its luxury arm Jaguar Land Rover (JLR) released a cautious outlook for the current financial year. The announcement, hinting towards lower Ebit margins in FY26 and flat cash flow, soured investor sentiment, triggering a sharp sell-off in the stock.
Amidst persistent macro weakness plaguing the automobile industry, JLR now expects its Ebit margin for FY26 to fall within the range of 5% to 7%, a significant decline from the 8.5% margin that reported in the previous year. Additionally, the company has guided for its free cash flow to come in close to zero this year, compared to a healthy £1.5 billion in FY25.
While looking ahead, JLR’s management remains optimistic, aiming to restore its Ebit margins to 10% and improve free cash flow by FY27 and FY28, it is yet to chart out a specific timeline for the margin recovery.
Even with its challenges, JLR remains the biggest contributor to Tata Motors' earnings, generating 71% of the group’s revenue and 80% of its profitability in FY25.
As the global automotive industry grapples through the potential impact of Trump's sweeping trade tariffs, Tata Motors stands out as one of the most exposed Indian automakers, dragged due to its ownership of Jaguar Land Rover, which exports vehicles to the US.
On that front, JLR further revealed that it continues to engage with the Trump administration on tariff-related issues. While a UK–US trade deal is expected to reduce import tariffs from 27.5%, vehicles manufactured in Slovakia will continue to face higher tariff rates.
Even in a challenging premium auto market, JLR managed to outperform peers and retained its position as the number one premium carmaker in May.