Tata Motors Passenger Vehicles (500570) Q1 25/26 earnings summary

Executive summary

• Q1 FY26 was challenging with consolidated revenue down 2.5% year-over-year to ₹104,407 Cr, impacted by global demand softness, US tariffs, and commodity inflation.

• JLR revenue fell 9.2% YoY to £6.6 billion, with EBIT margin at 4.0%, affected by US tariffs, China luxury tax, and FX headwinds, but maintained strong brand positioning and record revenue per car.

• Commercial Vehicles maintained strong margins (EBITDA 12.2%, ROCE ~40%) despite a 4.7% YoY revenue decline; Passenger Vehicles saw revenue drop 8.2% YoY and EBIT margin turn negative.

• Lifetime battery warranty for key EV models and new launches in CV and PV segments drove positive consumer response and robust EV momentum in July.

• Final hearing for the demerger concluded, with effective date set for October 1, and acquisition of Iveco Group (excluding Defence) announced, expected to close by April 2026.

Financial highlights

• Consolidated Q1 FY26 revenue at ₹104,407 Cr, down 2.5% YoY; EBITDA margin at 9.2% (down 480 bps YoY); EBIT margin at 4.3% (down 370 bps YoY); PBT before exceptional items at ₹5,617 Cr.

• JLR Q1 revenue at £6.6b (down 9.2% YoY), EBIT margin at 4.0%, and free cash outflow of £758m.

• Tata Commercial Vehicles Q1 revenue at ₹17,009 Cr (down 4.7% YoY), EBITDA margin at 12.2%, EBIT margin at 9.7%, and ROCE at ~40%.

• Tata Passenger Vehicles Q1 revenue at ₹10,877 Cr (down 8.2% YoY), EBIT margin at -2.8%.

• Net auto debt stood at ₹13,500 Cr; free cash flow negative due to seasonality, tariffs, and adverse working capital.

Outlook and guidance

• Global demand expected to remain challenging in the short term; domestic demand to gradually improve with festive season, infrastructure spending, and new launches.

• JLR maintains FY26 EBIT margin guidance of 5%-7% and expects free cash flow close to zero, improving in FY27 and FY28.

• PV segment expects margin recovery in H2, driven by improved model mix, cost reduction, and festive demand.

• CV segment projects volume improvement with healthy monsoon, repo rate reduction, and government tenders.