Tata Motors sees passenger vehicle pressure in Q2 FY27

Tata Motors expects commodity-related cost pressures to persist into the second quarter of the current financial year. The homegrown auto giant, which posted an 80% plunge in quarterly profit and warned that margin pressures would persist into the second quarter, believes the impact will be across the segment in the July-September quarter, not only on Tata Motors.

Tata Motors PV last week reported a quarterly consolidated net profit of 7.75 billion rupees in the April-June quarter compared to 39.24 billion rupees in the year-ago period. Speaking on this performance and expectations in the second quarter, Shailesh Chandra, Managing Director and CEO of Tata Motors Passenger Vehicles Ltd. and Tata Passenger Electric Mobility Ltd., said the Q2 margin is going to hit Tata badly. “Not just us, but the whole industry will get hit," Chandra said.

Jaguar Land Rover (JLR), which accounts for about 80% of Tata Motors PV's revenue, and its domestic passenger vehicle business both delivered below analysts' expectations in the first quarter FY27. Tata Motors PV has been facing multiple headwinds at JLR, including increased competition, heavy discounts and high warranty costs, Reuters has quoted Jefferies as saying in a note.

According to Nomura, margin pressure at JLR and in the domestic passenger vehicle business could weigh on Tata Motors' cash generation in the near term. Nomura maintained its neutral rating for the company, though.

Meanwhile, Tata Motors Passenger Vehicles has said that its investment spending will not change following the exit of parent Tata Sons' Chairman N. Chandrasekaran. Tata Motors is the first company in the Tata group to comment on its future plans after Chandrasekaran, who said last week that he will not seek reappointment as chairman of Tata Sons, citing the board's lack of backing after tensions with the charitable arm that controls the group. "Tata Motors has a clear strategy and a strong management team focused on execution," Chandra said, while adding, “We will remain fully focused on driving growth and create sustained value for our stakeholders."

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