Tata Motors faces margin squeeze despite strong sales growth

Tata Motors Passenger Vehicles reported a 9.3% rise in consolidated revenue in Q1FY27, but margins fell 120 basis points to 7.4%. Net profit plunged about 80% to Rs 775 crore, hit by supply constraints at Jaguar Land Rover, rising commodity costs and a higher electric vehicle mix. The Indian PV business saw a 46% jump in volumes and 66% rise in revenue, but margin improvement was limited to 20 basis points at 4.2%.

Raw material inflation had a 4.5% margin impact in Q1, and the company expects a 3.5% impact in Q2. JLR wholesale volumes fell 9.2% year-on-year due to a supplier fire, West Asia disruption and winding down of legacy Jaguar models. Brokerage JM Financial cut its FY27 margin forecast for the India business to 6.8% from 8.3%, though it raised volume growth estimates. The stock fell 4% on the results.

Times of India reports that the profit squeeze is affecting multiple carmakers. Maruti Suzuki's net profit fell 10.8% despite record sales of 6.8 lakh units. Hyundai Motor India's net profit dropped 35%. Analysts say automakers are absorbing higher input costs to protect sales momentum, and capital spending on multiple powertrain technologies is also eating into current profitability.