Tata Motors Share Price Drops 4% on June 16; JLR Forecasts Lower Margins for FY26

Tata Motors Ltd has been gaining attention on Monday following its UK-based subsidiary, Jaguar Land Rover (JLR), sharing a conservative financial outlook for FY26. The company expects its EBIT (Earnings Before Interest and Taxes) margin to be in the range of 5% to 7%, significantly lower than the 8.5% margin recorded in the previous financial year.

Free Cash Flow Projections Slashed

JLR had reported a free cash flow of £1.5 billion in the last financial year. However, it now anticipates that figure to shrink dramatically to nearly zero in FY26. Management has indicated that they are working towards improving cash flows in FY27 and FY28 and are targeting a long-term return to a 10% EBIT margin, although no specific timeline has been committed.

JLR’s Significance to Tata Motors

For FY25, JLR contributed a substantial 71% of Tata Motors' consolidated revenue and accounted for 80% of its overall profitability. The average revenue per unit remained stable at above £70,000, despite challenges in the premium auto segment. Notably, JLR managed to retain its No.1 position in the premium segment as of May 2025.

Tariff Concerns and China Growth Plans

On trade matters, JLR continues discussions with the US administration to lower tariffs under the UK-US trade agreement. While US tariffs may see relief, exports from Slovakia continue to face the 27.5% rate. In a bid to unlock new markets, JLR plans to launch the Freelander in China via a licensing agreement with its joint venture partner, with the first unit expected in H2 FY26.

Tata Motors Share Price Performance

On June 16, 2025, Tata Motors share price opened at ₹711.00, down from its previous close of ₹712.05. At 11:44 AM, the share price of Tata Motors was trading at ₹683.30, down by 4.04% on the NSE.

Also Read: SpiceJet Posts Record ₹319 Cr Profit in Q4 FY25 Results!

Conclusion

Despite near-term financial pressures, JLR’s long-term strategic moves, especially in China, and ongoing tariff negotiations may help balance its muted FY26 forecast.

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