Tata Motors: Volumes Many Decline by More Than 12% in FY26

US tariffs have come down from the peak tariffs of 27.5% for both Europe’s and UK’s exports. They nevertheless remain higher than the earlier tariffs of 2.5%, up 300% for UK exports and 500% for EU exports. Additionally, lowering of the price threshold for luxury taxes has further impacted demand for the products of the company in China.

Considering a weak demand situation in most markets for JLR, with additional operating costs, we expect volumes to decline 12.3% in FY26, with a rebound of 10.9% in FY27. We remain cautious in the near term due to the tariff overhang, subdued global macroeconomic conditions, an ageing PV portfolio, slowing EV growth amidst higher competition, and moderate growth for CVs.

We value the company on a SOTP basis, on an EV/EBITDA basis for the core business (1.25x for JLR, 10.5x for India CV and 9.0x for India PV) for a target price of INR 647 and maintain a REDUCE rating.

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Source: HDFC Securities Institutional Equities