Global brokerage firm CLSA has maintained an ‘Outperform’ rating on Tata Motors with a target price of ₹805, despite a cautious outlook for FY26.
According to CLSA, Tata Motors’ subsidiary Jaguar Land Rover (JLR) has guided for a decline in EBIT margin to 5–7% in FY26, compared to 8.5% in FY25, and expects neutral free cash flow after delivering £1.5 billion FCF in FY25.
The cautious stance is attributed to multiple macro and industry-specific challenges, including:
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Rising US tariffs on European and partially UK imports
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Changing regulatory norms amid weakening demand for battery electric vehicles (BEVs)
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Ongoing pressure in China’s premium passenger vehicle segment
Despite these headwinds, JLR will maintain its FY26 investment guidance at £3.8 billion. CLSA believes profitability should bounce back from FY27 onward, as improved scale and cost-saving initiatives worth £1.4 billion annually start to bear fruit. The company is targeting a 10% EBIT margin in the medium term.
Disclaimer: The views expressed in this article are those of the brokerage firm and do not constitute investment advice by Business Upturn. Investors are advised to consult their financial advisors before making any investment decisions.