Tata Motors Forecasts Jaguar Land Rover Margins to Soar in the Second Half Following Strong Demand

Indian automaker Tata Motors announced on November 2 that it foresees further margin improvements at its Jaguar Land Rover (JLR) division following robust demand for its luxury vehicles.

The company has raised its full-year earnings before interest and taxes (EBIT) margin projection for JLR to approximately 8%, up from the previous estimate of 6%. JLR’s EBIT margin for the quarter ending on September 30 surged to 7.3%, a significant increase from the 1% reported earlier. As a result, Tata Motors’ overall EBIT margins climbed to 7.5%, up from the previous 2.4%.

Tata Motors Chief Financial Officer PB Balaji expressed confidence in JLR’s prospects, citing a pick-up in volumes and a consistently strong product mix. He stated that these factors put JLR on course to achieve an EBIT margin of 10% by fiscal 2026.

Strong sales at JLR are a pivotal contributor to Tata’s earnings, as the British division accounts for two-thirds of its parent company’s revenue. Tata Motors’ overall revenue jumped by 32.1% to 1.05 trillion rupees, driven primarily by a 21% increase in retail sales of JLR models, including those from its China joint venture.

Nonetheless, Tata Motors fell short of its quarterly profit estimates due to increased expenses, which offset the strong JLR sales. The automaker reported a consolidated quarterly net profit of 37.64 billion rupees ($452.47 million), slightly below analysts’ expectations of 43.52 billion rupees, as per LSEG data.

An annual shutdown at JLR plants also had an impact, resulting in a sequential decline in JLR’s quarterly cash flow, falling to 300 million pounds from 451 million pounds in the June quarter. Quarterly expenses saw a 22% increase, totaling 1.01 trillion rupees, primarily due to a 20.7% rise in input costs.

Furthermore, revenue from Tata’s Indian passenger vehicle business experienced a 3% decline, attributed to buyers opting to wait for a newer version of its top-selling Nexon sport utility vehicle (SUV), which was launched in September, as stated by Balaji.