Tata Motors Shares Fall Over 5% as JLR Flags Cash Flow Concerns and Global Risks
Shares of Tata Motors fell over 5 percent to ₹673 after Jaguar Land Rover (JLR), its luxury vehicle subsidiary, raised concerns about weak cash flow projections and multiple macroeconomic risks in its latest investor update.
JLR stated that it expects its free cash flow to be “close to zero” in the financial year 2026. Despite this, the company reaffirmed its commitment to long-term investment plans and aims to maintain EBIT margins between 5 and 7 percent. The company is also focusing on enterprise transformation, targeting £1.4 billion in annual benefits through ongoing initiatives.
Key Risk Factors Identified by JLR
- Global semiconductor shortages
- Flooding issues impacting aluminium suppliers
- Increasing vehicle thefts in the UK
- High US import tariffs of 27.5 percent on UK and Slovakia-made vehicles
- Transition to battery electric vehicles (BEVs)
- Stricter environmental regulations
- Changing customer demands
Challenges in the Chinese Market
JLR noted that the premium vehicle segment in China is under pressure. Although the company is performing better than the broader market, it expects a 15 percent contraction in this segment for FY25. Additional challenges include a decline in new credit issuance and multiple dealership closures.
US Market Adjustments
To address the impact of tariffs, JLR temporarily halted vehicle shipments to the US in April. The company is now revising its pricing strategy and shifting focus to markets that offer better profitability.
Q4 Financial Performance
Tata Motors reported a 51 percent decline in consolidated net profit, falling to ₹8,470 crore for the quarter ending March 2025. In the same quarter last year, the company had reported ₹17,407 crore in profit. Revenue rose slightly by 0.4 percent to ₹1,19,503 crore but failed to meet analyst expectations.
Market Response
At around 10 AM, Tata Motors’ stock was trading at ₹677 on the NSE, down 5 percent from the previous close. The stock has dropped about 8 percent since the beginning of the year.