Tata Motors shares slip over 5% as JLR flags 'close to zero' cash flow in FY26, macro risks- Grow Mudra

Tata Motors shares slip over 5% as JLR flags 'close to zero' cash flow in FY26, macro risks

16 Jun , 2025 By : Debdeep Gupta

Shares of Tata Motors fell over 5 percent to Rs 673 on June 16 after Jaguar Land Rover (JLR), its UK-based luxury arm, flagged weak free cash flow expectations and a slew of macro risks in its latest investor presentation.

JLR said it expects free cash flow to be “close to zero” in FY26, even as it remains committed to its investment plans and aims to maintain EBIT margins in the range of 5–7 percent. The company highlighted that enterprise transformation remains critical to its “reimagine” journey, which is expected to progressively deliver £1.4 billion in annual benefits.

The British subsidiary listed multiple present and emerging risks that could impact profitability. These include a semiconductor shortage, aluminium supplier flooding, rising thefts in the UK, and looming concerns such as US tariffs, the transition to battery electric vehicles (BEVs), tightening regulations, and shifting customer expectations.

In China—the world’s largest auto market—JLR acknowledged mounting pressure in the premium car segment for FY25. Despite outperforming the broader market, JLR is facing stiff competition and economic headwinds. The company cited a 15 percent contraction expected in the premium market, with a sharp drop in new credit issuance and a wave of dealership terminations.

The company also detailed its strategy to mitigate the impact of US tariffs, which currently stand at 27.5 percent on vehicles shipped from the UK and Slovakia. JLR has temporarily paused shipments to the US in April and is reassessing pricing strategies and reallocating units to more accessible markets to optimise profit delivery.

Tata Motors reported a 51 percent decline in consolidated net profit to Rs 8,470 crore for the fourth quarter ended March 2025. The company had posted a consolidated net profit of Rs 17,407 crore in the same quarter last fiscal. Its consolidated total revenue from operations increased 0.4 percent at Rs 1,19,503 crore against Rs 1,19,033 crore in the year-ago period, thus missing estimates.

At about 10 am, shares of the company were trading at Rs 677, lower by 5 percent from the last close on the NSE. Tata Motors' stock is down 8 percent since the beginning of the year.