Tata Motors Q1 FY26 Net Profit Slumps Over 60% Amid US Tariffs and Weak Demand

Tata Motors reported a sharp year-on-year drop in consolidated net profit for the first quarter of FY26, plummeting approximately 62–63% to ₹3,924–₹4,003 crore, primarily due to softness in demand across its passenger and commercial vehicle segments and mounting pressure on its Jaguar Land Rover (JLR) business from new U.S. export tariffs. Despite these challenges, the automaker delivered yet another profitable quarter, supported by cost efficiencies and robust fundamentals, while maintaining cautious optimism driven by tariff clarity and festival season demand.

Financial Highlights

• Net Profit: The company posted a consolidated net profit of ₹3,924 crore, down 63% YoY from ₹10,514 crore. Some outlets reported ₹4,003 crore—a 62.2% drop—attributing this to lower volumes and the absence of last year's one-off gains

• Revenue: Operations revenue declined by approximately 2.5%, falling to ₹1.04 lakh crore compared to ₹1.07 lakh crore in Q1 FY25

• EBITDA & Margins: EBITDA dropped sharply—by 35–36% YoY—to ₹9,700 crore, and margins weakened markedly

Segment-wise Performance

• Jaguar Land Rover (JLR): Revenue slipped 9.2% to £6.6 billion, with EBIT margin down significantly to 4.0% (−490 bps). The decline was attributed to U.S. tariffs and the phasing out of legacy Jaguar models Despite this, JLR posted its 11th consecutive profitable quarter, although free cash flow remained negative at £758 million

• Commercial Vehicles (CV): Revenue declined 4.7% to ₹17,000 crore, but operating margins improved—EBITDA margin increased by 60 bps to 12.2%, and EBIT margin rose by 80 bps to 9.7%, assisted by better realizations and cost rationalization

• Passenger Vehicles (PV): Revenue fell 8.2% to ₹10,877 crore. Margins deteriorated—EBITDA margin dropped 180 bps to 4%, and EBIT slipped into loss at −2.8% (−310 bps)

Broader Context & Management’s View

• Tariff Impact: US duties accounted for a hit of £254 million (~₹2,230 crore) to quarterly earnings, and JLR forecast remains intact as a U.S.–UK trade deal is expected to ease tariff pressures going forward

• Strategic Positioning: CFO P.B. Balaji highlighted that despite macroeconomic challenges, the company remains strategically resilient. With hopes pinned on improving festive demand and clarity over tariffs, Tata Motors is working to regain momentum, especially ahead of a planned Oct 2025 demerger

Summary Table

Metric	Q1 FY26	YoY Change / Commentary
Consolidated Net Profit	₹3,924–₹4,003 crore	↓ ~62–63% (despite beating some estimates)
Revenue (Consolidated)	₹1.04 lakh crore	↓ ~2.5%
JLR Revenue	£6.6 billion	↓ 9.2% — Tariff-hit, legacy model phase-out
JLR EBIT Margin	4.0%	↓ 490 bps
CV EBITDA / EBIT Margins	12.2% / 9.7%	↑ 60 bps (EBITDA), ↑ 80 bps (EBIT)
PV EBIT Margin	–2.8%	↓ 310 bps (loss widened)

source:-buisness today,economic times