Brokerages decode Tata Motors' Q1 results; is the stock still worth buying?

Nuvama Institutional Equities flagged the sharp miss in Tata Motors' JLR and India PV earnings, reducing its FY26E/FY27E Ebitda estimates by 6-7 per cent.

Analysts on Tata Motors Q1 results: Automaker Tata Motors’ June quarter (Q1FY26) performance has prompted brokerages to lower their target prices and maintain a cautious stance on the stock, citing a combination of weaker-than-expected earnings, tariff challenges at Jaguar Land Rover (JLR), muted demand in key markets, and headwinds across its domestic businesses.

 

The company’s consolidated Ebitda for the quarter fell 35 per cent year-on-year (Y-o-Y) to ₹9,720 crore, missing estimates due to a steep drop in Jaguar Land Rover (JLR) profitability and pressure on the India passenger vehicle (PV) segment. 

 

JLR revenues declined 9.2 per cent to £6.6 billion, with Ebit margin shrinking to 4 per cent, as new US trade tariffs on UK- and EU-produced vehicles, along with planned Jaguar model phase-outs, hit volumes and margins.  Track Stock Market LIVE Updates 

Brokerages weigh in

 

Nuvama Institutional Equities flagged the sharp miss in JLR and India PV earnings, reducing its FY26E/FY27E Ebitda estimates by 6-7 per cent. “Tata Motors’ Q1FY26 Ebitda fell 35 per cent Y-o-Y to ₹9,720 crore (estimate: ₹9,970 crore) led by a 46 per cent drop in JLR due to weak volumes, US tariffs and forex losses. India PV Ebitda fell 36 per cent Y-o-Y due to lower scale, higher discounts and transition to new models,” the brokerage said.

 

The brokerage now builds in a revenue/Ebitda CAGR of 5 per cent/4 per cent over FY25–28E, projecting muted JLR volume growth of just 1 per cent CAGR due to the discontinuation of Jaguar models, weak China/Europe sales, and persistent US tariffs.

 

Analysts also expect subdued performance in India’s commercial vehicle (CV) business –  1 per cent CAGR –  on a high base, with competition from rail freight weighing on demand. “Retain ‘Reduce’ with a Sep-26E TP of ₹610 (earlier Mar-26E ₹670),” the report said.

 

On the other hand, Motilal Oswal Financial Services (MOFSL) noted that while the India CV segment delivered relatively strong performance, both JLR and India PV segments “face severe headwinds.” It cut its target price to ₹631 from ₹668 and maintained a ‘Neutral’ rating.

 

The brokerage cited “weak demand outlook across business segments” and highlighted that JLR is grappling with tariff uncertainty for US exports, weak demand in Europe and China, and rising variable marketing expenses (VME), warranty provisions, and emission-related costs. MOFSL expects margin pressure for JLR to persist, factoring in a 150 bps Ebit margin decline over FY25–27E.

 

Jefferies reportedly was the most bearish among the three, maintaining its ‘Underperform’  rating while lowering its target price to ₹550 from ₹600. It called the June quarter a “big miss” and noted that Ebitda had fallen to a 10-quarter low.

 

The brokerage warned of “multiple headwinds across businesses,” particularly for JLR, which is facing increased competition and consumption tax in China, higher warranty costs, and the ongoing transition to battery electric vehicles (BEVs). It also flagged that key JLR models are “starting to age,” potentially impacting competitiveness in the luxury segment.' 

Nomura, meanwhile, lowered its CV valuation to 10x EV/Ebitda (from 11x) given cash flows will be used to fund the Iveco acquisition. It also cut PV valuation to 1x EV/sales (from 1.2x earlier) due to weaker margin performance, and JLR’s valuation to 1.1x EV/Ebitda on demand risks. The brokerage rolled forward its valuation to average FY27–28F from June-26 and valued investments at ₹107 per share. 

 

It has reduced the target price to ₹704, from ₹799. It, however, maintained a  ‘Neutral’ rating.

 

Besides, Nomura noted that the stock trades at 4.6x FY27F EV/Ebitda – undemanding, but fair given the risks. Key upside triggers include a demand recovery for JLR and the success of new PV models like the Sierra, while key downsides remain tariff risks impacting global JLR demand and consumer sentiment in India.

 

Tariff relief ahead, but recovery to be gradual

 

While the recently signed UK-US trade deal – cutting tariffs on UK-produced vehicles exported to the US from 27.5 per cent to 10 per cent effective June 30, 2025 – and the EU-US deal to reduce tariffs on EU-produced vehicles to 15 per cent offer some relief, brokerages believe the benefits will only start to meaningfully reflect in the coming quarters.

 

For now, all three brokerages expect the near-term to remain challenging for Tata Motors. JLR’s transition away from legacy Jaguar models, rising input and compliance costs, and soft demand in China and Europe are expected to weigh on volumes and margins. In India, the PV segment is dealing with industry softness, model changeovers, and heightened discounting, while CV demand faces base effects and structural competition from rail transport.

 

Despite management’s optimism for a stronger second half – supported by festive season demand and the October 2025 demerger – the Street remains cautious. As Nuvama summed up, “muted growth expectations and persistent headwinds across businesses warrant a conservative stance.”