Tata Motors Q1 net profit falls 30% on lower volumes, JLR tariff impact

Tata Motors reported a net profit of ₹3,924 crore (around $446 million) for the April–June quarter of FY26, marking a 30% year-on-year drop from the ₹5,643 crore earned from continuing operations in the same period last year.

The decline was in line with analyst expectations.

Revenue from operations fell 2.5% year-on-year to ₹1.04 lakh crore, compared to ₹1.07 lakh crore in Q1 FY25.

This was a smaller drop than brokerages had projected.

Earnings before interest, taxes, depreciation, and amortisation (EBITDA) slipped 36% to ₹9,700 crore.

The Tata Motors stock had closed over 2% down on Friday ahead of the earnings release.

JLR hit by Trump's tariffs

The company attributed the weaker performance to volume declines across all business segments and a profitability drop at Jaguar Land Rover (JLR).

Tata Motors said US President Donald Trump’s tariffs had an adverse effect on the luxury automaker’s sales.

JLR’s revenue fell more than 9% to £6.6 billion, while its EBIT margin contracted by 490 basis points to 4%.

In the commercial vehicle segment, revenue fell 4.7% to ₹17,000 crore.

However, EBITDA margins improved by 60 basis points to 12.2%, helped by better realisations and cost savings despite lower volumes.

Passenger vehicle revenue dropped 8.2%, which the company linked to soft industry demand and a transition to new models.

Tata Motors outlook

Tata Motors said demand conditions are likely to remain challenging.

The company stated it would focus on strengthening business fundamentals, mitigating tariff impacts by leveraging brand strength to improve its product mix, and implementing targeted actions to lift contribution margins.

Group Chief Financial Officer PB Balaji said that despite macroeconomic headwinds, the company delivered a profitable quarter supported by strong fundamentals.

He added that as tariff clarity emerges and festive demand picks up, Tata Motors aims to accelerate performance and rebuild momentum across its portfolio.

Balaji also highlighted the upcoming demerger in October 2025, noting that management’s focus remains on delivering a strong performance in the second half of the fiscal year.

The Iveco deal

Last week, Tata Motors entered into an agreement to acquire Iveco Group N.V., a European commercial vehicle and mobility company, for ₹38,000 crore ($4.5 billion) through a subsidiary.

The Iveco Group board has recommended Tata Motors’ all-cash voluntary tender offer for its common shares.

The deal will be financed through a bridge loan to be repaid over four years, alongside plans to raise €1 billion in equity to support the acquisition, Balaji told reporters.

Once completed, this will be Tata Motors’ largest acquisition to date, surpassing its 2008 purchase of Jaguar Land Rover for $2.3 billion.

Balaji said the Iveco deal would rank among the Tata Group’s top acquisitions, alongside earlier purchases of Corus, Tetley, Jaguar Land Rover, and Daewoo Commercial Vehicles.

The transaction is subject to the separation of Iveco’s defence business.

Post-acquisition, Tata Motors’ commercial vehicle division and Iveco are expected to generate combined revenue of ₹2,20,000 crore, with operations spread across Europe, India, and the Americas, and strong positions in emerging markets in Asia and Africa.