Tata Motors Passenger Vehicles Ltd’s FY26 earnings showed that the domestic business is firing on all cylinders, but Jaguar Land Rover’s troubles continue to overshadow the gains.
The domestic business benefited from the post-GST 2.0 demand recovery, particularly in SUVs, EVs and CNG vehicles. Nexon and Punch continued to see strong traction, while recent launches such as Sierra and the refreshed Punch.ev added momentum.
The result: Tata Motors clocked an industry-beating 15% year-on-year (YoY) growth in sales volumes to more than 640,000 units in FY26, making it the second-largest passenger vehicle (PV) player in H2FY26. EV volumes surged 43% YoY to over 92,000 units, helping the company retain leadership with a mid-40% share of India’s EV market.
The problem, however, is that Tata Motors’ domestic PV business contributes only about 17% of consolidated revenue. The lion’s share still comes from JLR, which endured one of its toughest years in recent memory.
JLR’s operations were severely disrupted after a cyber incident halted production across facilities, with normalization achieved only in Q4FY26. FY26 revenue declined 21% YoY to £22.9 billion (approximately ₹2.7 trillion), while profit before tax collapsed to just £14 million from £2.5 billion a year earlier. Free cash flow turned sharply negative at £2.2 billion, pushing the company from a net cash position in FY25 to net debt of more than ₹30,000 crore on a consolidated basis.
The cyberattack was not JLR’s only challenge. US tariffs, weakening demand in China amid luxury taxes and intense competition, geopolitical shocks that drove up commodity prices, and the winding down of older Jaguar models ahead of new launches all weighed on profitability. That also explains why, despite the resumption of production, JLR’s Q4FY26 profit before tax halved YoY to £458 million.
Over the next two years, the company plans to reduce fixed costs and lower the sales volumes required to break even. It is also banking on launches such as the Range Rover Electric and the next-generation Jaguar lineup to drive growth. But much depends on how successfully these launches are executed and received in an increasingly competitive market. Ongoing friction within the Tata Trusts boards does little to inspire confidence.
Split story
The stock has fallen almost 20% over the past year, sharply underperforming the 10% gain in the Nifty Auto index. At less than 10x FY27 consolidated consensus earnings estimates, the stock trades at a steep discount to peers that command 22–27x price-to-earnings (P/E) multiples.
The domestic engine, meanwhile, is expected to keep revving in FY27, with management guiding for industry-beating growth driven by continued SUV traction, deeper EV penetration, production ramp-up and new launches under a multi-powertrain strategy.
Nuvama Institutional Equities expects India PV revenue/Ebitda to grow at a compounded annual growth rate (CAGR) of 19% and 36%, respectively, over FY26-28, driven by robust volumes, PLI benefits and an improved mix. “JLR revenue/Ebitda CAGR is at 16%/55% owing to low base, launches, better scale and cost savings,” it said in a 14 May report.
To be sure, JLR remains the elephant in the room. Elevated marketing expenses remain a concern and point to weakening global demand, according to Elara Securities. The next 12-18 months will determine whether JLR’s transition to newer offerings becomes a meaningful tailwind, or another costly detour.