Tata Motors shares tumble 5%: JLR warns of near-zero cash flow in FY26

Jaguar Land Rover's downgraded FY26 outlook, including a halved EBIT margin and free cash flow near zero, triggered a sharp 5% drop in Tata Motors shares. This signals mounting macro risks and challenges in key markets like the UK and China, threatening Tata Motors' profitability which heavily depends on JLR.

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Updated 1h ago
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Sources: MoneycontrolLivemintCnbctv18+1
Tata Motors shares plunged over 5% following Jaguar Land Rover's (JLR) warning of near-zero free cash flow in fiscal year 2026 (FY26) and a downward revision of its EBIT margin forecast to 5-7%, from an earlier estimate of 10%. JLR, Tata Motors' British luxury car subsidiary, remains a critical revenue driver, contributing 71% to Tata's total revenue and 79% to operating profit in FY25.

JLR's outlook reflects multiple challenges including a semiconductor shortage, aluminium supplier flooding, rising thefts in the UK, and looming risks such as US tariffs and the transition to battery electric vehicles (BEVs). The company also faces tightening regulations and shifting customer expectations.

In China, the world's largest auto market, JLR anticipates a 15% contraction in the premium car segment for FY25 amid economic headwinds, reduced new credit issuance, and dealership closures. Despite outperforming the broader market, JLR is under pressure from stiff competition.

The company expects free cash flow to be close to zero in FY26, down from £1.4 billion recorded in 2024-25, while maintaining commitment to investment plans.

Tata Motors reported a 51% decline in consolidated net profit to Rs 8,470 crore for Q4 FY25, compared to Rs 17,407 crore a year earlier, reflecting the impact of JLR's softer outlook. The revised EBIT margin guidance and cash flow concerns have dampened investor sentiment, causing Tata Motors shares to fall sharply.

"JLR remains critical to Tata Motors bottom line -- contributing 71% to revenue and 80% to profitability in FY25," analysts noted, underscoring the subsidiary's influence on the parent company's financial health.

Overall, JLR's enterprise transformation efforts aim to deliver £1.4 billion in annual benefits, but near-term risks and market pressures are expected to weigh on profitability and cash flow in FY26.
Sources: MoneycontrolLivemint
Tata Motors shares fell over 5% after Jaguar Land Rover (JLR) forecast near-zero free cash flow in FY26 and cut its EBIT margin guidance to 5-7%, down from 10%. JLR, contributing 71% of Tata’s revenue, faces risks including tariffs, supply shortages, and a shrinking premium car market in China.
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The Headline

JLR's FY26 outlook weakens; Tata Motors shares drop

Key Facts
  • Tata Motors reported a 51% decline in consolidated net profit to ₹8,470 crore for Q4 ended March 2025, down from ₹17,407 crore in the same quarter last fiscal.Moneycontrol2
  • JLR's FY26 EBIT margin forecast was cut to 5-7% from a previous estimate of 10%, down from 8.5% recorded in FY25.2
  • JLR expects free cash flow to be close to zero in FY26, a sharp decline from £1.4 billion recorded in FY25.MoneycontrolLivemint2
  • Tata Motors shares fell over 5% following JLR's softer FY26 outlook, dropping 5.5% to ₹672.95 on the NSE and 5.26% to ₹674.60 in intraday trade.2
  • JLR contributed 71% to Tata Motors' revenue and 80% to profitability in FY25, underscoring its critical role in the parent company's financial performance.3Cnbctv18Livemint
JLR said it expects free cash flow to be “close to zero” in FY26, even as it remains committed to its investment plans and aims to maintain EBIT margins in the range of 5–7 percent.
Moneycontrol
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Tata Motors shares dipped 5.5 per cent to ₹672.95 on the National Stock Exchange (NSE) in Monday's intraday trade after the company said it trimmed its financial year 2025-206 (FY26) earnings before interest and taxes (Ebit) margin forecast to 5 per cent to 7 per cent for its British luxury carmaker Jaguar Land Rover (JLR).
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JLR is also projecting a hit to its free cash flow in the current fiscal year, which is expected to reach close to zero from £1.4 billion recorded in 2024-25.
Livemint
Livemint
For financial year 2025, JLR contributed to 71% of Tata Motors' revenue and 80% of its overall profitability.
Cnbctv18
Cnbctv18
Indian benchmark indices gained as the session progressed and ended the day higher.
Equitymaster
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Key Stats at a Glance
Tata Motors Q4 consolidated net profit decline
51 percent
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Tata Motors Q4 consolidated net profit amount
₹ 8,470 crore
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JLR FY26 EBIT margin forecast
5–7 percent
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Tata Motors share price dip
5.5 per cent
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Tata MotorsJLRJaguar Land RoverFY26 outlookbusiness news
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Section 2 background
Background Context

JLR faces supply and market challenges impacting profits

Key Facts
  • JLR faces multiple risks impacting profitability including semiconductor shortages, aluminium supplier flooding, rising thefts in the UK, US tariffs, BEV transition, tightening regulations, and shifting customer expectations.Moneycontrol1
  • In China, JLR expects a 15% contraction in the premium car segment for FY25 due to stiff competition, economic headwinds, a sharp drop in new credit issuance, and dealership terminations.
Key Stats at a Glance
Expected contraction in China's premium car segment FY25
15 percent
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