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UBS lowered its price target on Tata Motors Ltd (NSE:TAMO). (TTMT:IN) stock to INR690.00 from INR720.00 on Tuesday, maintaining a Sell rating after Jaguar Land Rover (JLR) cut its profit margin outlook.
JLR significantly reduced its fiscal year 2026 EBIT margin guidance to 5-7% from its previous 10% target during its Investor Day 2025 held in Gaydon, United Kingdom (TADAWUL:4280). The luxury vehicle maker reported an 8.5% EBIT margin for fiscal year 2025, indicating the new guidance represents a year-over-year EBIT decline between 21% and 43%.
The automaker now expects zero free cash flow for fiscal year 2026, with adverse working capital anticipated, compared to the £3 billion generated in fiscal years 2024-2025. Management indicated these projections assume a timely trade agreement with the European Union and no changes to the already announced U.S. trade agreement.
While JLR did not provide specific guidance for fiscal years 2027-2028, the company stated it aims to reach a 10% EBIT margin by fiscal year 2028, driven by annual cost savings of £1.4 billion, representing approximately 500 basis points of improvement. JLR maintained its five-year investment plan of £18 billion despite the weaker earnings outlook.
UBS cited an "adverse risk reward" profile in maintaining its Sell rating on Tata Motors (NYSE:TTM), reducing its consolidated profit after tax estimates by 10% for fiscal year 2026 and 2% for fiscal year 2027 to reflect the weaker guidance from JLR.
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