Tata Motors Passenger Vehicles Ltd (NSE: TMPV) Q3 2026 Earnings Call dated Feb. 05, 2026
Corporate Participants:
Dhiman Gupta — Chief Financial Officer and Executive Director
Richard Molyneux — Chief Financial Officer
P. B. Balaji — Chief Financial Officer
Shailesh Chandra — Managing Director
Presentation:
Operator
Good day, and welcome to Tata Motors Passenger Vehicles Limited Q3 FY26 Earnings call. Today, we have with us Mr. Shailesh Chandra, MD and CEO, Tata Motors Passenger Vehicles Limited; Mr. P.B. Balaji, CEO, Jaguar Land Rover; Mr. Dhiman Gupta, CFO, Tata Motors Passenger Vehicles Limited; and Mr. Richard Molyneux, CFO, Jaguar Land Rover. And we also have our colleagues from the investor relations team.
Today, we plan to walk you through the results presentation followed by Q&A. As a reminder, all participants will be in listen-only mode, and we will be taking the questions via Teams platform. The same is already open to you to submit the questions. You are requested to mention your name and the name of the organization while submitting the questions.
I now hand over to Mr. Dhiman Gupta to take over. Over to you, sir.
Dhiman Gupta — Chief Financial Officer and Executive Director
Thank you, Anish. Safe Harbor statement, nothing material to report here. Our reporting segments remain the same. Commercial vehicle business is out since the last quarter post the demerger. Everything else is the same. Next slide, please.
In terms of key business highlights for the quarter, the domestic business has had a pretty busy launch calendar over the last couple of months started with the launch of the Sierra, which got a phenomenal response. Punch, which is the leader in the sub-compact SUV segment, received a phenomenal response in January. In between, we also had the launch of the 1.5 liter diesel engine, petrol engine for Harrier and Safari. In addition to the diesel and EV versions we already have, we also crossed 2.5 lakh EVs on road. That’s another milestone, and a lot more exciting stuff that Shailesh is going to touch upon in the latter half of the presentation.
For Jaguar Land Rover, the top most agenda for the quarter was to normalize the production post the cyber incident, but in between, a couple of exciting events, which showed the resilience and strength of its brand. The Defender won the Dakar Rally in its debut, in its class. We also had very positive reviews for the first India Drive of the new Jaguar on the media platforms. Next slide, please.
In terms of consolidated financial performance, obviously, tempered by the continued impact of the cyber incident at JLR, where we lost almost a month of production. Consolidated revenue came in at INR70,000 crores, or 26% down year-on-year, and slightly declined quarter-on-quarter. The JLR incident offsetting some of the strong, robust top-line growth that we saw in India post the GST rate cuts. But the EBIT margin still in the red. It was negative 4.7% for the quarter, a slight improvement quarter-on-quarter, both at JLR and for the domestic business. The loss before tax for the quarter before exceptional items came in at INR3,100 crores. I would like to call out that this excludes one — this excludes exceptional provision for almost INR1,600 crores. INR800 crores at JLR, additional impact because of the cyber incident, INR4000 crores one-time wage bill impact for India business, and another INR400 crores provisions we’ve taken for the stamp duty impact, as a result of the [technical issues] for the quarter, was at negative INR18,000 crores, largely because of adverse working capital movement and operating profits at JLR. The cumulative cash outflow for the quarter is about INR37,000 crores, and that reflects in the consolidated net debt as well. Next slide, please.
Yeah, we already spoke about the loss before tax for the quarter at negative INR3,000 crores. The cumulative decline being INR9,000 crore, almost all of it at JLR. The profit before tax for the India business flat on a year-on-year basis. Consolidated net debt for the group stands at INR39,000 crores. The India business is cash positive at INR5,000 crores, while JLR, it’s at INR39,000 crores. Next slide, please.
Richard, over to you to take through the JLR business.
Richard Molyneux — Chief Financial Officer
I’ll pause on this picture for a second, because although it wasn’t a quarter full of highlights, this was definitely one. So as Dhiman said, Defender won the Dakar Rally. It’s the world’s most grueling off-road endurance race. And to win it at our first attempt shows the true class of the Defender vehicles, so we’re proud of that. We move on to the next page.
The financial summary is shown here. The cyber event cost us around 50,000 units of production, and that led to a wholesale result of 59,100 in the quarter, though retails were almost 80,000. This drove revenue to GBP4.5 billion, with average revenue per car, however, still rising. Average revenue was GBP76,000 per car, despite a weaker dollar environment. EBIT was minus 6.8%, better than Q2, though this is largely the effect of inventory build down in Q2, relieving the balance sheet of some manufacturing costs, and that effect reversing in Q3. I’ve already seen a couple of questions on this, so I’ll explain a little bit more later on.
I mentioned at the end of Q2 that the main cyber-related cash burn would be in Q3, and it was. So lower sales, combined with recovering systems, that allowed us to pay overdue invoices from the cyber stoppage, and we also settled and paid most supplier claims before their December year-ends, which amplified our cash burn in December. On a year-to-date basis, below, including the effects of US tariffs and cyber, we were -2.9% EBIT and negative just over $3 billion operating cash. As our plants are now back to operating at full pace, we’ll look to build this position back in Q4 to end the year within our guidance levels. Next chart.
As per usual, I won’t cover this. I’ll cover all the points in it during my comments, and this is for your reference. Next chart.
Wholesales by brand is shown here, all impacted by cyber, but the relative performance is largely driven by the ramp-up sequence of our plants, with Nitra, the home of the Defender, being the first that ramped up, and Halewood and the Velar lines starting last. Hence, Defender wholesales were actually up on Q2, whereas Range Rover was down. On a full year basis, Range Rover as a brand was down 25%, although that’s led by the Evoque, which was down 41%. Defender is down less, and you can see the effect of our run out of legacy Jaguar production as we turn full attention to the pre-production testing of the upcoming amazing cars. Next chart.
From a regional perspective, I referenced in Q2 that the long lead markets, especially overseas and China, had been protected from the immediate effect of cyber as they already had cars on the water. It was the UK and Europe that took the brunt of the hit in Q2, and therefore, in Q3, this naturally normalized, with Europe and the UK both rising quarter-on-quarter, whilst China and overseas suffered from the hole in their inbound shipments. So it’s best to look at the year-to-date numbers, where the UK and overseas have outperformed the US and China on a relative basis. This reflects the pressures of tariffs in the US and industry overcapacity, retailer margins, and luxury pushback in China. These are the two biggest car markets in the world, so when they both suffer simultaneously, the OEM’s world gets very difficult. Next chart.
Looking from the same quarter last year, when we made a profit before tax of GBP523 million. So volume is the biggest element, 45,000 fewer units sold at 59,000 versus 104,000 last year. Duties continue to be year-over-year negative, cumulatively now with GBP410 million adverse in the first nine months of the year, and this is only partially offset year to date by emissions. In the third bar, VME continues to grow as we try and secure order intake and retail in a very competitive environment. Retail incurred rates were 7.7% in Q3 versus 4.2% last year, with the biggest deterioration being in China. While we continue to make some progress on material costs, we had two significant warranty bookings for campaigns and buybacks that drove warranty higher, as you can see here.
In structural costs, I mentioned the P&L effect of restocking, and finally, dollar weakness continued in the quarter, and it combined with an upward re-rating of key raw materials. Though hedges offer short-term protection to these trends, if they turn structural, then that’s another challenge for us to face. Next chart.
Walking from EBIT through to cash, we delivered GBP166 million cash profit after tax. Investment spending rose versus an artificially low Q2 number, as we paid invoices that were stuck through the cyber incident and made accelerated capital payments to a series of suppliers ahead of their financial year ends. Working capital was significantly negative from the inventory buildup and the lower volume quarter. Cumulative year-to-date working capital is circa negative GBP1.25 billion, although a proportion of that will reverse in Q4. Next chart.
I mentioned investment earlier, and we’re still in a heavy investment spend period as we build up to multiple product launches over the next 24 months. Engineering capitalization ratio, at 60%, is lower than recent quarters, and that’s due to the effect of cyber, meaning engineers were not able to progress work on vehicle programs that had passed their capitalization hurdles. This will grow back from Q4. CapEx, I’ve already referenced, was above trend levels in the quarter, but will also revert back to normal in Q4. Next chart.
So to the business update. Again, next chart. Looking forward, we have to face reality. The environment in which we are operating has changed rapidly and almost universally in an adverse direction. We recognize this will require us to adjust our business model, and we’ll share much more on this in our Investor Day in June. In terms of the main issues, the first nine months of our financial year saw us pay an additional GBP410 million in tariffs, and a bout of dollar weakness reduced the sterling value of the main remaining dollar revenues. In the same months, we paid GBP375 million more on sales allowances to drive order intake and retail. Emissions regulations outside the US keep biting harder and harder year-after-year, and the UK government, restricted on the spend side, are significantly increasing the tax burden.
And finally, in China, we’ve seen a 26% reduction in volume year-over-year, more of which on the next chart. Combined, this picture is not a very constructive business environment for JLR to operate in. Next page.
But China specifically, here’s a little bit more background. On a market which is, it’s highly dynamic and has spillover effects on almost all global markets other than the US. It’s the biggest car market in the world, and at the premium end is shrinking, as you can see, down 21% year-over-year, with luxury taxes hitting the very top end and domestic new energy vehicles attacking the bottom. A slowing market and rapid capacity build-out has also led to a supply-demand imbalance in the market that is driving thousands of retailers into insolvency. You can see 5,000 there last year alone.
This is not a short-term boom-bust cycle. This is structural and permanent in China, and JLR has, until very recently, weathered the storm well, with volume reductions lower than the market. But in recent months, we’ve suffered more severely. Our plan is simple, manage retailer inventory to protect sales quality, drive demand through brand development, and leverage the run-out of our locally produced cars to focus purely on profitable imported models, with our JV leveraging Freelander in the more mainstream market segments. Sort of the final chart. Next chart. Thank you.
For the balance of the year, we’ve got 53 days to go, and whilst it’s true that I can see more risks than opportunity as of today, we are reconfirming our guidance of greater than 0% EBIT and free cash flow in the range of negative GBP2.2 billion to negative GBP2.5 billion. We’ll give you an update on FY27 and beyond at a later date, and that’s another really good reason to attend our Investor Day. That’s going to be held in mid-June. For now, that’s all from me.
I’ll hand you back to Dhiman and Balaji. Thank you very much for your time.
Dhiman Gupta — Chief Financial Officer and Executive Director
Yeah, Anish, next slide, please. Yeah. For coming on to the domestic business, I think the first half of the year was a challenging time when we had seen a demand slowdown, especially in the less mentioned weaker segment. And our market share had reflected that by showing a drop over FY25. As that’s the segment where we had the maximum exposure to, the fourth, the GST cuts, we’ve seen a continuous strong rebound in our market share, which has improved about 1.5% from Q1 FY25. We are mostly the best positioned from a category mix perspective with a very balanced exposure towards petrol, diesel, EV, and CNG. Our penetration in EV and CNG continues to improve, and in year-to-date at FY26, the penetration of EV and CNG stood at 43%. Next slide, please.
In terms of the Electric Vehicle business, very strong growth year-on-year, about 50%, with volumes moving on from 16,000 per quarter to 24,000. There was a slight concern on the sustainability of EV demand, because the GST rate cuts made the TCOs adverse, but the early signs are that our demand still remains stable. Our strategy of having EVs at various price points, plus all the value enhancements we are doing, as well as the lifetime warranty, has played out very well in the last couple of months, and we’ve seen almost a 10% market share gain since Q1 FY26. Next slide, please.
In terms of financial performance, 24% top-line growth. This was on the back of the record top volumes of 170,000 that we had in Q3 FY26. Demand continues to be very strong, and we’re looking for an even more positive end to the year. I think Shailesh is going to kind of cover it. On EBITDA margin and EBIT margin for the quarter stood at 7% and 1.2%, respectively. About 1% gain on a quarter-over-quarter basis, profit before tax stood at INR300 crore flat on a year-on-year basis. Next slide, please.
As I mentioned, our PBT year-on-year was flat, about INR300 crores. We saw significant gains coming through from volume and mix on back of the rising demand. We also had about INR178 crore of increase coming in from incentives. Our incentives for the quarters stood at INR361 crore, and accruals for the year was stood at INR573 crore. The accruals for PLI, I mean, I guess the obvious question is, what would be the steady state or telling state of PLI? But that’s difficult to comment because the accruals end up being a little volatile, depending on when we receive the incentives, and the certifications for our products. The gains that we had on PLI and volumes were partially offset by adverse realizations year-on-year. The high fixed marketing expenses that we had to sustain for a very busy launch calendar. The D&A year-on-year was also about INR120 crores higher, largely because we hit the SOPs of Sierra, Punch, and Curvv, and the Harrier Safari petrol engine in Novembe, December itself, so that we are ready for supplies in January. But the quarter-on-quarter impact next quarter will be much lower. Moving on to the next slide.
P. B. Balaji — Chief Financial Officer
Thank you, Dhiman. So starting with the industry, in quarter three, the PV industry saw the highest ever offtake of nearly 13 lakh. This was on the back of festive period and GST tailwinds. The industry has been growing at a strong double-digit pace, post the GST 2.0, and that has been around 20% growth year-on-year in quarter three. Also because retails were significantly higher than offtakes in quarter three, channel inventory reduction has also been significant across OEMs. And roughly 10% to 15% days of reduction, one would have seen in quarter three. Also post GST 2.0, there has been secular growth across segments. Almost all vehicle segment and subsegments have grown double-digit. In particular, few segments have grown sharply, which include the compact SUV, subcompact SUV, mid SUV, and a few more.
Coming to EVs, the EV industry has been growing sharply in FY26, and the growth was sustained in quarter three, with 76% growth year-on-year. And this growth has been a result of new launches and a general positivity on EVs. Talking about the high — Tata Motors’ performance, we recorded our best ever quarterly performance with a wholesale of 171,000 and retails crossing for the first time 200,000 mark, a growth of over 22% compared to quarter three of the previous year. The momentum sustained in Jan ’26, where we achieved all time high monthly sales of 71,000 units, reflecting a 47% year-on-year increase. As per Vahan data, we rose to the number two position in the Indian market with a 13.8% market share, which was an improvement of 100 bps versus quarter two of this financial year.
In EVs also, we achieved our highest ever retails in quarter three, driven by over 10,000 retails in the month of December. We also saw an improvement in our market shares in EVs, with an exit market share of about 46% in December. Among our products, Nexon saw very strong demand of over 63,000 in Q3, emerging as the highest-selling model in India. Punch also featured among the top three SUVs with a strong demand momentum post GST. Next slide.
Over the past few months, we have had several critical launches that will be key growth drivers for the business in quarter four and beyond. The highly anticipated Sierra launched to a very positive response. It secured 70,000 bookings on the first day and continues to see strong booking momentum. As we ramp up production for Sierra over the coming months, we will be able to serve this demand pipeline, and this will be a key growth driver for us. The launch of Punch Facelift will strengthen traction for what has already been a very popular product. With the fresher aesthetics and enhanced competitiveness, Punch already recorded its highest-ever volumes in January 2026, backed by robust customer demand.
Introduction of petrol variants for Harrier and Safari has widened our reach in the segment, enabling us to cater to a broader set of customers. We are seeing a strong initial response for the petrol variants in the key markets. We also re-entered the fleet segment with petrol and CNG versions of Xpres, which will help us tap into the growing fleet segment. The key focus areas going forward, we are optimistic that industry will continue to witness sustained positive demand trends. And Tata Motors PV is well positioned to maintain its growth momentum, supported by a healthy order book for current models, disciplined inventory levels, and incremental volume from recent introductions.
In terms of EVs, growth will be sustained on the back of a reinforced portfolio and focused efforts on mainstreaming, including the charging infra. We will scale up production for Sierra to meet the strong customer demand, and from a profitability perspective, we will improve profitability through operating leverage from higher volumes, a richer product mix, on the back of Sierra, Harrier, Safari interventions, and sustained structural cost optimization to offset commodity headwinds and enhance contribution. So back to you, Dhiman, for providing [speech overlap]
Dhiman Gupta — Chief Financial Officer and Executive Director
Thank you. Moving on to the free cash flows for the domestic business. The FCF, even at about INR300 crore, the cash profit after tax less investment spend was at worst by about INR200 crore. But there was positive working capital changes in the quarter on the back of high demand, leading to the FCF of INR300 crore. Next slide, please.
Our total investment spending year to date is about INR3,800 crore, running at about a steady state. And total CapEx investments year to date has been about INR3,100 crore. We expect to end the year somewhere around INR4,200 crore to INR4,300 crore for the full year. Next, please.
Moving on to the outlook for the business of the group. Obviously, it’s been a very challenging last couple of quarters for the group, on the back of the US tariff in Q1, followed by the cyber incident. H1 was also pretty weak for the domestic business, when there was a demand slowdown. However, we plan to end the year on a strong footing with the Jaguar production normalizing, a very strong demand recovery in India. And the Jaguar brand remains strong and resilient, which is very critical as it navigates all the geopolitical uncertainties, as well as executes its enterprise missions. In India, the refreshed portfolio and the new nameplate introductions on the back of a very strong current demand recovery places us very well to leverage the demand fully, as well as we are going to accelerate our structural cost reduction programs that Shailesh mentioned to improve on our profitability. Thank you. Also like to mention that we have our Annual Stake Investor Day Meet sometime in June 2026, and just wanted to give that heads up so that you people look out for the date that we will separately be giving you.
Moving on to the Q&A session.
Questions and Answers:
Dhiman Gupta
A couple of questions already lined up. Richard, the first set of questions coming your way. First one is where is the break-even FCF for Jaguar in terms of wholesale sales per year? I believe it used to be around 325,000 units per year. Is that the case? How is your order book at the end of Q3? VMEs have significantly increased year to date, reaching 7.7%. Where and when do you see them reaching peak levels?
Richard Molyneux
Okay. So let me go through that set of questions. So it’s fair to say that this year, our cash break-even is significantly above 325,000 units. But that’s a metric that’s best used prospectively, to judge how well the business is performing rather than retrospectively. Prospectively, we’ll give you a proper update on FY27 and the years beyond, in our Investor Day in June. So probably, defer further conversation of that until then.
Our order bank is in a decent place at the end of Q3, and is higher than it was at the end of September, so we are building order intake that relatively strongly. I think — the power of our brands is our biggest advantage, and I did mention the Dakar win early on, but we’re already seeing a direct influence of that on the order intake on Defender. So Defender order intake is now around 10,000 units a month from the global press coverage and brand enhancement that things like Dakar have. So we will focus on continuing to grow our brand and use that to pull through some of the problems that we face.
But we will keep needing to spend money on VME. That’s the third part of this question here. It did reach 7.7% in Q3. I expect it may go up marginally in the next six months, but after that point in time, when we’ve run through the Jaguars, and we’re starting to think through launching new vehicles, I would expect that to cap and start to come down. So the peak level relatively close to that 7.7. And in terms of your fourth part of your question, in the bond market, look, we’re assessing it. I don’t have anything to announce at this stage, but we’re definitely looking at it.
Dhiman Gupta
Okay, Richard. Can we take up the second question also from Kapil, Jaguar gross margins, can you please explain the sharp improvement quarter-over-quarter, even high VME? What is the outlook on account of commodities and basically the semiconductor prices?
Richard Molyneux
Okay. So look, gross margins, the explanation is simple and complex at the same time. Whenever you build down inventory, you take manufacturing cost out of your balance sheet and charge it through the P&L. Whenever you build up in inventory, the reverse happen. So in Q2, we destocked massively because we weren’t producing any cars. So that meant that the P&L took a charge from the balance sheet for fixed manufacturing and other overheads. In Q3, that reversed. That’s the main cause of the difference in gross margin. It’s simply a timing effect and the stocking cycle. You can see the flip side of that in our working capital numbers, because our working capital grew rapidly in Q3.
Dhiman Gupta
So just to hold it, couple of pages also, take a look at the EBIT bridge that Richard has called out. That actually teases out the various line items in greater detail. What’s it on mix? What’s it on emissions? What’s it on warranty? What’s it on the labor and overheads that Richard just referred to? I think that will give you a good color on how the flow is happening. And beyond EBIT, we also have the impact of the currency as well. So I think as you understand that sheet better, I think it’ll give you all the answers that you’re looking for.
Next set of questions from Ganesh. Richard, sending it your way. How do you see increasing competition from local brands in the luxury car segment? JLR debt has increased substantially due to operational disruptions. Do you expect to go back to net cash flow position in the next two, three quarters? How has tariff translation strategy evolved, considering demand, environment, and production disruption? I think VME, you kind of already explained, so you can skip that. Given the transitory and structural challenges, is there a case to revisit your CapEx guidance? SCF guidance implies 4Q SCF for GBP0.5 billion to GBP0.8 billion. Does it imply that 4Q production wouldn’t have to be normalized?
Richard Molyneux
Right, so we’re here to have subsection F. Okay, I’ll start at the top. Well, in China, there is definitely a squeeze on the luxury segment, and that is a squeeze from below in terms of the local new energy vehicles, but also a squeeze from above in terms of a general move away from luxury by the Chinese authorities, which is evidenced partly by their increase in luxury car tax thresholds in July, where they basically levied an extra 10% duty on all cars with a transaction price between RMB 900,000 and RMB 1.3 million. So there is a bit of a squeeze going on, and you can see that in all OEMs data in relation to China. We are going to make sure, as I referenced earlier, we do not overstock that market and that we rely on the power of our brands to pull through sales. Accepting that in the short term, that is going to mean that we hurt a bit in China, but we will protect that market for its long-term abilities to grow.
Our debt has increased. It will certainly not get back to net cash over the next two or three quarters. That is going to be something that takes a little bit more time. You can see from the fact that we started the year with GBP250 million, roughly, of net cash. We will lose in our guidance between GBP2.2 and GBP2.5, and additionally, paid a dividend of circa GBP450 million during the year. So you can work from that, where we will end up this year, and then, as I said beforehand, we’ll give you guidance on the 2027 and beyond in our investment day. But it is not something that is going to disappear over the next two to three quarters. It is more embedded than that.
Tariff transmission strategy, it’s a good question, but one that’s really difficult to answer. So we did increase our prices in the US, and we increased things like delivery charges and various other mechanisms to try and recover some of the duties. Market forces then overtake, and what you find is we are probably compensating a fair amount of that now in terms of increased VME. As all manufacturers globally suffering in China or in some other markets look at those markets which are still robust and try and push sales. So it’s a really good question. It’s not quite so easy to answer in terms of how much of our price increases are from the tariff changes have actually stuck, and how much are being compensated by other market forces.
Next one, yes, it was partly due to the Jaguar phase-out. So the only vehicles in Jaguar that we’re currently producing, and that’s only for another few weeks, is the F-PACE, where we are building some stock for the US market. Other than that, we are literally in the run out of all old Jaguars. I’ve mentioned VME before. CapEx guidance, I think, will be 3.6 to 3.7, from what I can see today. And your point around FCF is correct, that GBP0.5 billion, GBP0.8 billion positive is where we are heading, and what we need in order to meet the numbers that we have committed to. And Q4 production, it has normalized. So you know the majority of our business is focused on Range Rover, Range Rover Sport, and Defender. Those vehicles, the first two are produced in Solihull. The last one is produced in Nitra. All of those plants are now back, fully running at capacity, and there are no residual cyber issues in those two plants. So, yes, Q4 will return to normal. I mentioned beforehand that we took exceptional charges related to cyber in Q2 and Q3. We will not do so in Q4. Q4 will be normal.
Dhiman Gupta
Thanks, Richard. Moving on to the next set of questions from Leila. How do you see CY26 outlook for North America, Europe, UK and China? Can you indicate launch timelines for RRTD? Can you indicate Q3 production of active inventory? And is the production going to be around 110,000 on, I think, some commentary around incentives in the US?
Richard Molyneux
So I’ve tried to cover demand generally. China is definitely the most challenging market at the moment. The rest of them are okay, but not a lot better than okay, I think, I would say. Where’s that question disappeared to? Sorry, if you could keep it up on screen, that would really help me.
Dhiman Gupta
Just hold on, Richard. Hold on, hold on. Thanks. Yes, hello.
Richard Molyneux
Okay. Well, I tell you what, let me — then we go on to product launches. Oh, no, here we go. I’ll wait.
Dhiman Gupta
I’m thinking of a glitch here. Just hold on.
Richard Molyneux
That’s all right. I’ll hold it. I’m trying to see if I can find any questions for Shailesh and Dhiman.
Dhiman Gupta
Okay, maybe, I’ll take the next question.
P. B. Balaji
Yeah, go for it.
Dhiman Gupta
Take it up, Shailesh, the next question coming your way. For India, how much was the commodity impact expectation for Q4? What was the blended price in January? Can you indicate the blended discounts for retail in Q3? What is the current outstanding bookings for Sierra? And what would be the current capacity? Will March capacity be at 15,000 units?
Shailesh Chandra
There are multiple questions. Can you just —
Dhiman Gupta
Yeah, we’ll take one by one, sir.
Shailesh Chandra
Just go one by one, please.
Dhiman Gupta
First question, how much was the commodity impact expectation for Q4?
Shailesh Chandra
So we can’t give guidance of what the commodity expectation was for Q4, but generally, we have been seeing, even in the last few quarters, it has been about 1.7% to 2% of our revenue. We are still assessing what is going to be the plan back in Q4. What was the next question?
Dhiman Gupta
What was the blended price hike taken in January?
Shailesh Chandra
We haven’t taken any price hike in January. We are yet to take, but in February we are going to take. The exact percentage increase we are going to announce whenever we take it.
Dhiman Gupta
Can you indicate blended discounts for vehicle in Q3?
Shailesh Chandra
Blended discount would be somewhere around 3.5% to 4% of our revenue.
Dhiman Gupta
That also — that’s not all, consumer discount, it also includes,
Shailesh Chandra
The incentives to the dealers. Yes.
Dhiman Gupta
Yeah. What is the current outstanding booking for Sierra? What would be the current capacity, and will you be increasing the capacity to 15,000 units a month by March?
Shailesh Chandra
Yes. We can’t share with you the current status of the bookings, but I can clearly tell you that 70,000 is what we had announced on December 16th. It’s of course six digits in six digits. As far as the capacity is concerned and ramp-up, I think in January we were able to supply about 7,000 units. And the deliveries started only from January 16th, so we are clearly in a ramp-up phase. The first — even before I talk about in-house ramp-up, the first level problem is this on the supply ramp-up from the suppliers itself. And also, there’s a clear signal that one is seeing that industry volumes have also increased from 350,000 to nearly 420,000 a month in the last three months, four months we have been seeing. And therefore, at tier 1 to tier 3 supplier level, especially at, let’s say, for example, castings and all, we are seeing that there is general capacity constraint that is coming. So we are working on enhancing the capacities and ramping up the supplies from the suppliers. In-house capacity ramp-up is happening to the extent of capacity which has been dedicated to Sierra in our Sanand-2 factory, but we are also increasing the capacity further in two phases in the next five to six months. And therefore, the waiting period, which today would be, say, around six to seven months, should progressively come down as we ramp up and further ramp up with the enhanced capacity in the next five to six months. That’s broadly the commentary on the status of Sierra bookings and capacity ramp-up.
Dhiman Gupta
I’ll move on to the next question, that’s from Kapil. How much PLI was accounted in the quarter, and what was the percentage of the portfolio getting PLI benefits? So, Kapil, we — I think we put that in the IR deck, the total PLI for the quarter, which was about INR361 crores and INR573 crores for year to date in the first nine months. And about 40%, 45% of our revenues in India are eligible for PLI incentives, and that’s what we are approving, and that should go up even more when we move to value offering. Shailesh, I’ll direct the next question to you as well. I think current booking numbers, I think Shailesh already answered the question on bookings and capacity for Sierra.
The next question is on, how to look at guidance for demand on Harrier and Safari volumes post the 1.5 liter petrol launch. How are we thinking on Curvv volumes post the Sierra launch? And how do you see growth outlook for domestic vehicle industry and Tata Motors for next quarter and FY27? How does the product pipeline post Sierra look like?
Shailesh Chandra
Okay. The first question was on?
Dhiman Gupta
First question was on how do you think of the demand?
Shailesh Chandra
Yeah, Harrier. So, yes, Harrier, I think petrol is going to… The indications basis the bookings that we have, which has been flowing, is about 30% to 35% of our volume should come from petrol. Right now, we are again on the ramp-up phase because, as I said, that there is common engine sharing between Sierra and Safari, so we are distributing in a balanced way, the engine supply. So again, it’s more of capacity side issue, which I think we’ll be able to work on in the coming months. So strong bookings, extremely strong, strong bookings we are getting for Harrier. And what we are realizing, that these customers were only looking for petrol. There is no overlap with diesel or electric, is what we see.
As far as Curvv is concerned, there are certain interventions that we are taking on the product. And we are particularly seeing — December onwards, we saw that there has been uptick in the demand for this 15 lakh to 20 lakh segment of EVs, in which Curvv EV falls, and we have seen a significant spurt of demand there. And I would say that Curvv is a car where it’s a unique design, first time being seen in India, and therefore it’s going to take time, just like we had seen for Nexon. When you bring a new design, it takes time to design to be assimilated and accepted in the market. So we are quite optimistic about Curvv, going forward, progressively increasing in volumes. What was next question, Dhiman?
Dhiman Gupta
The next question was, how do we — how are we looking at demand —
Shailesh Chandra
Yes.
Dhiman Gupta
2026 and quarter four?
Shailesh Chandra
Yeah. So the first month of quarter four was about 14% growth for the industry. We were at about 46%. We clearly see that the growth of the industry in quarter four will be around 13% to 14% kind of a zone. We should be 40%, roughly that kind of a growth rate. So we expect that for FY26, therefore, the industry would grow by about 8% to 9%, rough guesstimate, I would say. Whereas, for us, we should be somewhere in mid-teens, so it would be a double-digit industry-leading growth for us.
Dhiman Gupta
Okay. And if you could take the last question, Shailesh, how does the product pipeline look post Sierra?
Shailesh Chandra
Yeah. So I think this is something which you’ll have to wait for. There are clear nameplates, three nameplates that we have talked about, in the next four to five years. But beyond Sierra, we are also going to get a lot of refreshes, model year interventions, and also the mid-cycle enhancements for the current portfolio also. And of course, there are EVs, which are going to come. The Punch EV, which is going to come very soon. You have Sierra EV, which is going to get launched, and as I said, mid-cycle enhancements and new launches, which we’ll talk about later on.
Dhiman Gupta
Okay, Shailesh, one last question before I move back to Richard. How do we assess EU trading implications for the India auto sector? That is, does it potentially cap Tata Motors’ premiumization trajectory in the UV segment, and conversely, are we revisiting localization strategies for the JLR portfolio?
Shailesh Chandra
Okay. So first part I’ll answer. We have very less details about the European trade deal, but basis whatever we are reading and whatever information we have, we clearly see that it’s not going to impact in any big way as far as our strategy and journey of premiumization is concerned. Any player who has to compete effectively in India will have to localize with whatever we are reading in terms of the duty rates, which will still remain. So there’s no impact immediately, for sure, but over a period of time also, not localizing in India will have a difficult strategy from a strategy perspective for any player. By just exporting, it will be very difficult. But yes, it does give some flexibility for the players from Europe to experiment with new models in India before they commit to investments here, is what we would say.
P. B. Balaji
Yeah, just building on, building on Shailesh’s point, as far as JLR, localization strategy is concerned, if you recollect, we already have localized Range Rover and Range Rover Sport here in India in terms of CKD manufacturing. That strategy, obviously, from a commercial perspective, whatever makes sense is what we will do. So we’ll continue to see how the thing evolves. Before the EU deal, as anyways, only the UK deal is one, the first one that’s primacy for us, which we need to see how best we can leverage it to the best of our ability. So very much a work in progress on that front, and we’ll talk more about it in the Investor Day. Dhiman?
Dhiman Gupta
Yeah. I think, moving on to the next question, I’ll go back to Richard. Richard, any insight on product launches along with rough timelines in FY27 for JLR, especially Range Rover EV and Jaguar ramp up?
Richard Molyneux
Yeah, of course. So look, plans are always adjusting, but as of now, we’re going to launch the Range Rover Electric this year and start delivering to customers, and we’ll also unveil the new production Jaguar car, this year. And finally, also unveil the first car off our EMA platform. That’s a unique new model from the Range Rover family that’s going get built at Halewood. So we are approaching a really, really busy launch period for JLR in the next couple of years. Again, we’ll give you more details on timings, et cetera, at the Investor Day.
Shailesh Chandra
This is pretty sure. Dhiman?
Dhiman Gupta
Yeah. Yes. Moving on to the next question from Vinay. I think some of these questions have already been taken up by Richard. Yeah, next quarter is going to be a normal quarter for JLR. I think on PLI incentives accrued for the quarter and year to date have also been answered. I think with a few questions from Vinay, and I think Gunjan on EV margins, I think the EV margins, move up and down depending on the rate at which PLI is being accrued. And it’s not a normal rate, so I’ll kind of request you to reach out to the IR team, and we can take you through the details. Yeah.
Richard, next question, I think you’ve partly answered, but if you could take this up. Can you cover how we should think about VME and warranty costs, which have continued to go up?
Richard Molyneux
Yes. So VME, I think, is a, is an industry trend at the moment. As I’ve, as I’ve mentioned, there are — the China market is shrinking for, for many OEMs, and that is increasing pressure in, other markets for, all OEMs to try and access the sales. So I mentioned beforehand, I do think it is near peaking, but it may have a little bit further to go over the six months or so. So, but nothing more to say on the matter at this point.
Dhiman Gupta
Okay. Next question from Nishit. How are the dealer inventory levels across markets? Are they much below normal, given that you’ve not been able to supply? Next question, I think VME questions you’ve already answered a couple of times. Warranty expenses remained high at 7.7% of sales. Any quarterly-related one-offs there, and how could you sustain it in the next one or two years? And the last question, how should one look at sustainable EBIT margin levels between FY27 and FY28?
Richard Molyneux
Okay. So I’ll try and cover those. Dealer inventory levels, certainly in some markets, such as the US, are fairly low at the moment. I, I was in the US, earlier this year, and there are large numbers of dealers who normally would have vehicles all over their front lots, where it was fairly empty. So, dealer inventory in the US is tight. We are filling it now, but it has been fairly tight, as we work to basically refill our supply chain following cyber. That is temporary, and it will relieve itself during Q4. There was a question, I can remember, on warranty, and, yes, there were one-offs in this quarter to the tune of circa GBP100 million related to one-offs in campaigns and buyback provisions in the USA. So we are not running at a normalized rate of 7.7%. It is a lot lower than that, and we intend these one-offs to stop as quickly as we can.
Dhiman Gupta
Okay, moving on to the next question, I think, from Rakesh. I think first half of the question you’ve kind of already taken. Moving on to the next part, can you please update on Freelander rollout plan? It appears it is going to be sold outside China as well, and which all markets are under royalty income agreement.
Richard Molyneux
Okay, so Freelander is also going to start production, I think, this year. It will be initially for China only, but when we announced Freelander, we did say it would be available for global rollout over time, and that, I think, is still the case. It will be managed by our joint venture in China between ourselves and Chery. And look, obviously, there is a royalty arrangement within that. I am absolutely not going to comment on what that is. However, we are very much expecting that vehicle to be or that vehicle and vehicles, ’cause it won’t end up as being just one, to be a big success.
Dhiman Gupta
Okay. Thanks, Richard. The next question also your way, EBIT margin guidance was 5% to 7% before the cyberattack. What would the range be possible ahead? Our key models, Range Rover, Range Rover Sport, and Defender are in niche premium categories. Is competitive intensity from Chinese OEMs high in these categories in North America, Europe, and China? And media reports indicate Chery Automobile is in early-stage negotiations to use JLR production capacities in UK. And any comment on that?
P. B. Balaji
So the second — I’ll — the second one, I take. we don’t comment on speculative reports, so wouldn’t want to comment on that. But, Richard, the first one, I will give it back to you.
Richard Molyneux
Yeah. Yeah. So, absolutely right on that. So EBIT margin, 5.5% to 7% before the cyberattack, always difficult to say. I would suspect we would’ve been close to the bottom end of that range before cyber. The fact that foreign exchange, a little bit of VME, et cetera, have moved adverse to us quite significantly over that period means I think we would’ve been around the, around the bottom end of that. In relation to Range Rover, Range Rover Sport, and Defender, look, Chinese OEMs are coming, and they’re coming globally. So far, outside of China, there hasn’t been that much of an impact in terms of the segments of the markets in which we operate, because the one thing that Chinese OEMs do not have is brands, and brands is where we are focusing our unique selling point, along with the capabilities of the vehicles, which sort of emphasize those brands. So there’s two choices. Either the world goes completely protectionist, in which case they’re protected from Chinese cars, but with considerable disadvantages, or it goes free trade. JLR prefers a free trade model. It is a better model for JLR, and we welcome competition. It will force us to be better. So, are we concerned? Yes. Are we paying close attention? Yes. Are we frightened? No.
Dhiman Gupta
Okay. Shailesh, sir. Next question from Kapil your way. We mentioned that margins will improve from Q4 FY26, led by Sierra launch and price hike in Jan 26. How much price hike have we taken? Can you please give an update if we are on track to improve margins in light of commodity pressures?
Shailesh Chandra
So, as I said in one of the earlier replies, that we are going to take price increase this month, and we’ll be able to tell you the extent of price increase whenever we take it. Sierra, of course, has enhanced our margin. Also, the VME, which was very high in earlier quarters, has come down, so you can clearly — while the commodity price pressure remains, but as a result of all these actions, and the tailwinds that we have in quarter four, with very low inventories and all at the start of quarter four, so you can definitely expect a much better margin, as compared to what you had seen in quarter three, in quarter four.
Dhiman Gupta
Thank you, and, Shailesh, sir, I’ll hand it back over to you to take the last question for the day, from Kapil, is there a big change in first-time buyers for Tata Motors for the industry after GST cut? Which segment of cars are first-time buyers, going for more?
Shailesh Chandra
I cannot give you offhand what has been the increase in first-time buyers, but yes, there is a definite increase that we have seen in first-time buyers. Maybe separately, we can ask the investor relations team to give that information to you. But the segments which have really responded well post GST 2.0, I also mentioned, it seems, is the subcompact SUV and the compact SUV segment, which has seen a growth much higher than the average growth that we have seen of 20% in the segment. Maybe these two segments will be more upwards of 30% or maybe 25%, 26% or so. So these are the two segments which I’ll say in the less than 4-meter category, which has seen significant traction. Post GST 2.0, I think midsize SUV segment also has seen a growth better than the average growth of the industry, but that is also to do with the new launches. So it’s a combined effect of new launches as well as general reduction in GST rate.
Dhiman Gupta
Thank you. Thank you, Shailesh, and that brings us to the end of the Q3 FY26 call. See you on the call next quarter, and in between, you should hear from us that informing you about the results of the Investor Day in June. Thank you, and have a good evening.