Tata Motors PV shares crash 7% despite 2110% YoY surge in Q2 profit. What's behind the fall?

Shares of Tata Motors Passenger Vehicles (TMPV) crashed over 7% in early trade on Monday, November 17, despite posting a 2,110% year-on-year (YoY) surge in net profit as the performance of its luxury business, Jaguar Land Rover, weighed.

According to brokerages, while the India PV business performance is in line with expectations, JLR is facing significant challenges in its key markets, even beyond the cyber incident.

Analysts largely recommended a ‘reduce’ or ‘sell’ rating for the newly demerged TMPV stock, which houses the passenger vehicle, electric vehicle, and JLR businesses of Tata Motors.

TMPV share price hit the day's low of ₹363.15 on the BSE, down 7.2% against its last closing price of ₹391.60.

Tata Motors Q2 Results

Tata Motors Passenger Vehicles reported a staggering 2,110% year-on-year jump in profit to ₹76,170 crore, driven largely by a one-time notional gain of ₹82,616 crore. Without this exceptional item, the company actually recorded a loss of ₹6,368 crore, compared with a profit of ₹3,056 crore in the same quarter last year and ₹2,597 crore in Q1 FY26.

Overall revenue dropped 13.5% YoY to ₹72,349 crore.

According to the company, a major cyber incident at JLR significantly affected performance, while domestic operations remained stable and recovered following GST reductions.

Meanwhile, Jaguar Land Rover swung to a £559 million quarterly loss and slashed its guidance after a cyberattack temporarily halted production.

The Defender maker now expects an operating margin of 0% to 2% in fiscal 2026, down from an earlier 5% to 7% target, having already pared its outlook this year amid tariff-related uncertainty.

It projects a negative free cash flow of £ 2.2 billion to £2.5 billion ($3 billion-$3.4 billion) for fiscal 2026, reversing its earlier forecast of breaking even.

JLR management has indicated that Q3 will also see some impact of the cyber incident, although production has now normalised in November.

Tata Motors Shares: Buy, sell or hold?

Brokerage Motilal Oswal has said that the bigger cause of concern is the fact that demand for JLR continues to be weak in key regions, including China, the US and Europe, and hence VME is likely to remain elevated, at least in the near term.

The brokerage, against this backdrop, lowered its EBIT margin assumptions for JLR to 2% for FY26E and expects the same to improve to about 5% by FY28E (earlier estimate of 6.5% for FY28E). Given the significant challenges at JLR, brokerage MOSL initiated coverage on the recently demerged Tata Motors PV stock with a ‘Sell’ rating and a SoTP-based TP of ₹312 per share.

Nuvama Institutional Equities also recommended a ‘Reduce’ rating to the Tata Motors PV stock with a September 2027 target price of ₹385.

It is building in a moderate revenue/EBITDA CAGR of 7%/3% over FY25–28E. For JLR, it expects flat volume CAGR during this period owing to the discontinuance of Jaguar models and weak demand in key regions. However, it expects India PV revenue to grow at an 11% CAGR over FY25–28E.

ICICI Securities downgraded the stock from ‘Add’ to ‘Hold’, with a SoTP-based revised target of ₹375 (earlier ₹466) amid weak operating performance.

“Near-to-medium term outlook for JLR remains muted given the challenging demand environment. Likely continuation of elevated VME spends and slow and gradual passthrough of US-tariffs, over a period of 15–18 months, is reflective of a bleak demand situation. Domestic PV business, however, may see healthy revival supported by GST-cut and new launches,” said ICICI Securities.

Disclaimer: This story is for educational purposes only. The views and recommendations expressed are those of individual analysts or broking firms, not Mint. We advise investors to consult with certified experts before making any investment decisions, as market conditions can change rapidly and circumstances may vary.