TMPV tumbles on JLR hit in Q2; analysts cut outlook, flag structural risks

TMPV Q2 results review: Tata Motors Passenger Vehicles Ltd (TMPV) posted troubled September quarter (Q2FY26) results, with Jaguar Land Rover’s (JLR) sharp deterioration overshadowing a steady India passenger vehicles (PV) performance and dragging the consolidated business into one of its weakest patches in recent times, analysts said. 

 

The results prompted a chorus of cautious views from brokerage, all pointing to worsening global conditions for JLR, margin resets, and rising balance-sheet stress.

 

Meanwhile, on the bourses, Tata Motors PV shares bled, with the stock dropping up to 7.26 per cent to hit an intraday low of ₹363.15 per share. Around 10:30 AM, Tata Motors PV shares were trading 3.78 per cent lower at ₹376.80 per share. By comparison, BSE Sensex was trading 0.21 per cent higher at 84,742.78.

 

That said, the quarter saw consolidated revenue decline 14 per cent Y-o-Y to ₹72,350 crore, but the bigger shock came from the operating level, where TMPV swung to an Ebitda loss of ₹1,400 crore. The hit was driven largely by JLR, which faced a mix of tariff expenses, production losses, weaker demand and unfavourable mix, factors that analysts believe will remain in play over the near term.

 

Analysts at Nuvama noted that JLR’s weak showing, compounded by tax-related headwinds in the US and China and a production shutdown, sharply dented profitability. The brokerage cut its FY26-28 consolidated Ebitda estimates by 5-8 per cent and now expects flat JLR volumes over the medium term due to the discontinuation of Jaguar models and subdued demand across key markets. While India PV revenues are expected to clock an 11 per cent compound annual growth rate (CAGR) over FY25-28, the domestic strength is insufficient to counter global pressures. Nuvama maintained a ‘Reduce’ rating with a lower target price of ₹385.  ALSO READ | Ashoka Buildcon slips 6% on posting 80% decline in PAT YoY; rev down 26% 

Those at JM Financial highlighted the severity of the margin compression at JLR, where Ebit margin fell to -8.6 per cent amid tariff-linked costs of £74 million, forex headwinds of £237 million, higher warranty provisions and the impact of the cyberattack-led production loss. 

 

With geopolitical and supply-chain risks persisting, JLR slashed its FY26 Ebit guidance to 0-2 per cent (from 5-7 per cent) and now expects a steep free cash outflow of £2.2-£2.5 billion. JM Financial pointed to some positives in the India PV segment, especially EV margins improving to 4.2 per cent on the back of PLI benefits and better mix. Still, it initiated coverage with a ‘Reduce’ rating and a ₹365 target amid continued fragility in the global business.

 

Motilal Oswal delivered the starkest assessment, calling the quarter one of TMPV’s weakest in recent memory. JLR’s -1.6 per cent Ebitda margin was far below its estimate of +7 per cent, weighed down by reduced volumes, higher variable marketing expenses, cost pressures and lower engineering capitalisation. 

 

The brokerage flagged structural risks, including the impact of higher US tariffs and China’s luxury tax, which could permanently dent medium-term profitability. 

 

Net consolidated auto debt surged to ₹20,100 crore from a net cash position six months earlier, with JLR accounting for the bulk of the deterioration. While India PV demand has revived and retail sales during the festive season were strong, margins remain under pressure due to elevated discounts and cost inflation. Motilal initiated coverage on the India PV business with a ‘Sell’ rating and a target price of ₹312, cutting JLR’s valuation multiple to 2x EV/Ebitda amid mounting headwinds.  ALSO READ | Narayana Hrudayalaya jumps 9% on posting strong Q2 results; PAT up 30% YoY 

Across the board, brokerages agree that JLR’s troubles go well beyond the cyber incident. Weak global luxury demand, tariff shocks, rising warranty costs, higher VMEs and strategic product transitions have created a challenging, multi-quarter profitability reset. 

 

Even as India PV maintains momentum and EV margins improve, the consolidated drag from JLR is expected to persist at least through Q3.

 

For now, analysts reckon, TMPV’s domestic resilience offers some cushion but not a turnaround. With guidance slashed and debt rising, the road to recovery, especially for JLR, could be longer and more complex than earlier assumed.