Tata Motors shares fall over 5% after JLR warns of profit squeeze and market risks

Tata Motors shares fell sharply on Monday in early trades after its UK subsidiary Jaguar Land Rover (JLR) issued a cautious margin outlook and flagged multiple global headwinds. The stock slipped nearly 5.5% to ₹672.95, before recovering slightly to ₹682.80, down 4.11% over its previous close. It now trades over 43% below its 52-week high of ₹1,179.05.

JLR lowered its earnings before interest and taxes margin guidance to 5–7%—well below its previous 10% target. The downgrade came amid uncertainty around potential U.S. import tariffs. The luxury carmaker recently paused shipments to the U.S. after the Trump administration imposed a 25% duty on foreign-made vehicles, disrupting its second-largest market.

The luxury automaker also faces growing pressure in the premium segment in China—the world’s largest auto market. Despite outpacing the broader market, the company expects a 15% contraction in the segment in FY25, driven by weakening consumer sentiment, reduced credit availability, and dealership network shake-ups, as over 4,400 dealers exited the market in CY24. On top of that, heavy discounting is intensifying competition as 215 models saw massive price reductions. 

JLR also flagged multiple risks that could hurt profitability, including an ongoing semiconductor shortage, supply chain disruptions due to flooding at an aluminium supplier, rising vehicle thefts in the UK, and regulatory headwinds from the transition to battery electric vehicles.

JLR also warned of a sharp decline in free cash flow in FY26, projecting it to fall from £1.5 billion in FY25 to near zero, due to a planned increase in capital spending. However, management maintained a positive long-term view, expecting year-on-year improvement in free cash flow from FY27 onward.