Jaguar Land Rover (JLR) revised its FY26 EBIT margin guidance from 10% previously to a range of 5-7% now also lower vs. the 8.5% margin delivered in FY25. In the near to medium term, the company is facing challenges including currency volatility, elevated capex (GBP 3.8bn in FY26 vs GBP 3.2bn in FY25), higher working capital requirement and product transition related costs. In FY26, the company expects its FCF to decline to near-zero, compared to GBP 1.5bn in FY25, with improvement in FY27 and FY28 based on new model ramp up.
Investment Rationale
Jaguar Land Rover hosted its Investor Day on 16 Jun?25. The company guided for 5-7% EBIT margin for FY26 (vs.8.5% in FY25). In the US, the company is taking measures including reallocating vehicles to more accessible markets and pricing actions, to help counter the impact from tariffs. We expect near-term performance in JLR to be strained amid US tariff-related uncertainties, and weak demand trends in China. JLR expects its FCF to decline to near-zero in FY26 (compared to GBP 1.5bn in FY25), before improving YoY in FY27 and FY28, as the new models ramp up. For its domestic business, Tata Motors is focusing on regaining growth momentum via new launches and on margin expansion. ICICI Securities maintains ADD with an SoTP-based target price of Rs 775 (unchanged), implying 11x/2x FY27E India/JLR EV/EBITDA.
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