Jaguar Land Rover's FY26 outlook remains subdued amid volume stress, China sales pressure

Tata Motors stock has shed nearly 35 percent in the last six months.

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26 Aug, 2025 12:21

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Following an interaction with PB Balaji, Group CFO of Tata Motors, Nuvama Institutional Equities noted a continued weakness in Jaguar Land Rover's FY26 outlook, weighed down by stress on volumes and lingering pressure on China sales.

The brokerage highlighted that while JLR is on track to meet its FY25 EBIT margin target of at least 8.5 percent and turn net cash positive, FY26 volumes could face pressure due to model discontinuations and a sluggish China market.

JLR's retail network faces challenges with a 30 percent reduction in outlets in 2024, but recovery efforts are underway to focus on stock and model mix optimisation and enhancing retailer profitability. However, Land Rover is expected to outperform the broader industry.

Meanwhile, if the US imposes tariffs on Europe, JLR plans to mitigate the impact through price hikes and cost savings, the brokerage noted.

On the other hand, India’s passenger vehicle growth in FY26 will be driven by the repositioning of the Currv model, the launch of the Harrier EV and Sierra, and an expanded service network. To that into effect, Nuvama projects a 2 percent revenue/EBITDA CAGR over FY25–27 and maintained a ‘reduce’ rating on the stock.

Also, Tata Motors' small commercial vehicle segment has contracted in FY25, however, Nuvama feels the focus now shifts on new product launches, multi-fuel options, and enhanced marketing efforts, given its business-to-consumer nature.

Shares of Tata Motors have also remained under pressure in recent times amid weakening outlook. The stock has shed nearly 35 percent in the last six months. On March 11, the stock ended flat at Rs 648.90.

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