Note: This is a preliminary transcript and may contain inaccuracies. It will be updated with a final, fully-reviewed version soon.
Tata Motors Passenger Vehicles Ltd (NSE: TMPV) Q4 2026 Earnings Call dated May. 14, 2026
Corporate Participants:
Unidentified Speaker
Dhiman Gupta — Chief Financial Officer and Executive Director
Richard Molyneux — Chief Financial Officer
Shailesh Chandra — Managing Director
P. B. Balaji — Chief Financial Officer
Analysts:
Unidentified Participant
Presentation:
Unidentified Speaker
CEO, Jaguar Land Rower Mr. Diman Gupta, CFO Tata Motors Passenger Vehicles Ltd. And Mr. Richard Molyneux, CFO Jaguar Land Rover and we also have the colleagues from the investor relations team. Today we plan to walk you through the results presentation followed by Q and A. As a reminder, all participants will be in listen only mode and we will be taking the question via teams platform. The same is already open to you. To submit the questions, you are requested to mention your name and name of the organization while submitting the questions.
I now hand over to Mr. Dhiman Gupta to take over to you sir.
Dhiman Gupta — Chief Financial Officer and Executive Director
Thank you Anish let’s start with the highlights for the year FY26 a story a story of two halves for the India business started with muted volumes in H1 but a very strong comeback in H2 where we were consistently ranked number two in market share on the back of demand for our popular brands and the new launches on the way. Punch also emerged as the fastest growing SUV to reach 6 lakh cars on road in four years. Moving on to JLR. A difficult year indeed for JLR, but one which also demonstrated the continued resilience of its house brands as it realizes and it prepares itself for adding exciting new products in its portfolio over the next 12 to 18 months.
Starting with Jaguar Erie Consolidated Financials with the normalcy of production at JLR or all the consolidated financial metrics are looking up. Revenue comes in at 105,000 crore for the year up 7 for the quarter up 7% year on year on the back of strong India growth story and the currency appreciation Pvt before exceptionals for the quarter was 7,200 crore and FCF was 11,000 crore. As we managed to unwind some of the working capital reversals that we saw in Q2 and Q3 for the full year all the metrics remained down as it was impacted due to two lost quarters of production at JLAB Pvt for the year was 2,500 crore and this excludes about 4,100 crore of exceptionals for cyber, the labor impact in India and the stamp duty charges for the demerger.
Next slide please. The Board has announced. The board has approved dividend of 3 rupees per share. The cash outflow for the dividends will be about 1100 crores. This will be approved. This will have to be approved in the ensuring shareholders meeting. Just to put the numbers in perspective, erstwhile Tata Motors paid 6 rupees in dividends for the last two years. The TML CV has announced 4 rupees of dividend in the results meeting yesterday. So this actually represents a total dividends of seven rupees in the year when the dementure was undertaken and a increase over the six rupees that we’ve paid for the last two years.
The net debt for the march for the year ending March 2026 was 30,000 crore, largely representing the 25,000 crore of Consol Cash1 and the 2,200 crore of dividends that we paid last year. PV remains cash positive at about 7,000 crore while the net debt at JLR stood at 33,000 crore. Over to you Richard.
Richard Molyneux — Chief Financial Officer
Thank you. Can you hear me okay?
Dhiman Gupta — Chief Financial Officer and Executive Director
Yes Richard, go ahead please.
Richard Molyneux — Chief Financial Officer
Let’s go to the next chart please. So as expected, we did recover strongly in Q4. We had 95,000 wholesales revenue of nearly £7 billion and EBITDA 9.2%. That’s only a little lower than our bumper Q4 last year and is actually the same EBIT level as we achieved two years ago. FX revaluation did hold PBT back a little bit further but we returned to being significantly cash positive generating £829 million in the quarter. This performance allowed us to achieve our external guidance for the year. So we ended up with 0.7% EBIT within our 0 to 2% guidance and we ended up at the better end of our cash guidance with full year cash loss just over 2.2 billion pounds versus a minus 2.2 to minus 2.5 billion range.
Having said that and delivered what we promised in Q4, it is accepted that our full year financial performance is far from what we had intended when we started the year, so corrective action is necessary. Next page I won’t go through this as per usual. It contains all the points I’ll cover off in the presentation here, just in the summary form in case you want to refer to it. Next page you can see wholesale volumes here by brand. Defender in particular continues to defy industry norms and go from strength to strength through its life cycle, up quarter on quarter and year over year in Q4.
And although Range Rover was down versus Q4 last year, almost all of this was accounted for by Evoque and Velar, with Core Range Rover and Range Rover Sport fairly flat year over year. The biggest change and one fully planned for was Jaguar down 5,700 units versus Q4 last year. As we progressed towards the new brand and the new product on a full year basis, on the bottom row we achieved 308,000 wholesales with again Defender, Range Rover and Range Rover Sport showing the strongest performance. Next chart.
So here’s the same data by region or actually the more interesting data is the full year data in the bottom row of the chart. The biggest change was the US where tariffs made some derivatives and channels non viable. We also significantly reduced our retailer stock levels in the US and that had those are the ones that we had deliberately brought up at the end of last year prior to the tariff introduction. So there’s a bit of a free tariff post tariff correction there. China’s down 27% year over year versus FY25 reflecting the impact of the new luxury taxes that were issued in July and also general market downturn, excuse me, requiring us to also reduce dealer stock levels to protect sales quality in other regions.
Sales were consistently plus or minus 15% down from our very bumper FY25. Next chart. So this turns back to the financials and shows the walk from PBT in Q4 last year which was £875 million to to this year’s 458 volume and mix was 44 million negative and this is much lower than you would naturally expect from losing 16,000 units. But the mix offset was really strong. Range Rover, Range Rover, Sport and Defender was 77% of our sales in the quarter versus 66% last year. Tariffs and duties were negative 114 million but offset in the quarter by the removal of reserves from federal CAFE regulations in the states that were triggered in the quarter on a full year basis.
Our incremental tariff costs were around £525 million with over half of this being offset by lower US emissions impacts. In the next column VME it does continue to rise. It is at 7% versus 5% last year. And although we made savings in material costs, our warranty costs remain stubborn despite the focus that we have in this area. The other main change was in FX on the right hand side where sterling continues to strengthen versus the dollar which hurts us. The average rate in the quarter was 136 versus 125 last year and this leads to the operational variance of -265 million of which about half was offset through our hedging gains.
The revaluation of bonds and other liabilities was negative as there was a spike down in sterling right at our year end to close at 1.32. So that explains the walk down through to PVT. The next chart looks at the cash flow walk but on a full year basis. So cash profit after tax at 1.9 billion was impacted by tariffs, cyber etc. And at that level it was only half of what we achieved last year and insufficient to fund our year investment needs. This was exacerbated by adverse working capital as you can see on the right hand side, as lower volumes drove lower payables.
Next page A little more detail about investment on this page. On a full year basis we spent 5.3.57 billion of which 2.6 billion was engineering. As we progressed three new architectures towards their launches, investment was largely in facilities for those vehicles in our UK plants and also for the new BEV powertrains at our propulsion facility in Wolverhampton, engineering capitalization rates was marginally lower than FY25 at 64%. Okay, go next chart right so from the numbers to a little bit more qualitative business update and I’ll start this as you might expect with the Middle east conflict, there’s several impacts from this conflict.
On the demand side, sales in the Middle east which represent 6% of our total sales mix, they will be hitting Q1 and do note that given our wholesale recognition points for sales in this region, there was very negligible impact of the war. In our Q4 results, we do expect this demand impact to be temporary. We see no lack of underlying demand or interest in our brands or products in region. On the supply side, input price increases are certain to happen either directly through utility costs or freight rates or via the many components that are sensitive to petrochemical prices.
As of yet, however, we have not seen any component shortages resulting from the conflict, and that was one of the fears expressed earlier in the year on the expectation that there will be some form of resolution to the Most of the effects that I’ve spoken about should prove to be largely temporary. However, many of the other pressures in our industry are more enduring and structural and these are on the next chart. The splintering and volatility of geopolitics creates challenges from increasing protectionism, differing electrification appetites and technology concerns that, for example, mean we have to duplicate large parts of our ADAS developments.
This adds a very painful cost burden directly to the P and L and cash flow inflationary pressures I’ve mentioned. But even before the Middle east conflict they were visible in commodity prices with aluminium and copper for example being much higher than last year. And supply chains that have taken many years to establish are getting challenged by rules of origin requirements, potential made in Europe rules and shipping lane power struggles. Finally, it’s not just the growing nature of the regulatory framework, but particularly its volatility that hurts long lead time.
Capital intensive sectors such as Ours. Note however, that almost everything I’ve mentioned on this chart is related to the supply side of our business equation. So to look at the demand side, please flip to the next chart. So, on the demand side, the situation is more stable for us. You can see the summary here. Demand for Range Rover, Range Rover Sport and especially defending remains very strong. The latter boosted by Rally wins, Defender Trophy, Hard top derivatives and of course the Oasis Tortaia.
Regionally, North America is holding up well. It is a growth potential market for us. The UK and Europe are doing okay and China, after a very challenging year, seems at least to be stabilizing. So given this new world order in supply and demand side of our business, what’s our response next chart. The first part of our response is with an intensive launch of products that embody and embolden our brands. Range Rover Electric Range Rover Sport Electric will be the first into production, followed by the reveal of the production version of the new Jaguar Type 01.
And quickly after that, the launch of the first EMA car, a Range Rover. I’ve driven all of these cars and both the design and the engineering are staggeringly good. But also we know that we need to change internally to be fit for the new world order and this is what we’re doing through our missions. On the next chart, we’ve consolidated these to 5 launch excellence to drive the success of the products I just described. Three focused on our cost base to build back margins and then the foundational work on our processes, data and systems to enable speed and efficiency.
Together we’re targeting 1.7 billion pounds of savings over two years to bring our breakeven volume back down towards 300,000 units a year. So what does this mean for FY27? Next job? Our priorities are to grow our top line through our brands whilst resetting our breakeven volume and delivering multiple launches flawlessly. We’ll give financial guidance at Investor Day in June. So a great reason to join us here in Gaten. That’s going to be on the 17th of June. Don’t miss out on that note. I’d like to conclude and hand you back to the team.
Thanks for your time.
Dhiman Gupta — Chief Financial Officer and Executive Director
Thank you, Richard. The story of two halves that we mentioned at the start of the call playing out in these charts. A tough H1 for us and a very strong rebound in H2 with GS2 and the new launches exiting the year with more than 14% market share and consistently being ranked number two in PAHAN. The CNG and EV penetration continues to improve and it’s now greater than 40% of our portfolio and the favorable power trade mix reflecting in being well below the Cafe 2 norms. Next slide please. A similar story for EVs a strong recovery from Q1 onwards with the proactive steps that we have been taking towards mainstreaming of EVs and ending the year with a market share of over 40%
Shailesh Chandra — Managing Director
And delivering a 43% wholesale
Dhiman Gupta — Chief Financial Officer and Executive Director
Growth for FY26. Next slide please. The favorable industry demands and the new launches help drive two record quarters for us, delivering optic volumes of 170,000 in Q3 and over 2 lakhs in Q4FY26. This resulted in a 50% top line growth year on year and driving sequential improvement in profits from Q1 to Q4. We ended the year with 9.4% EBITDA margin for the quarter and 4.7% EBIT margin. The PVT before extraordinary expenses in Q4 stood at 1100 crores for the full year FY26 while the top line grew at 15%.
The EBITDA margins and the EBIT margins remain muted given the adverse pricing impact we saw for the first nine months of the year along with the steep commodity increases that we’ve been taking in through the year. Next slide please. Very strong PVT improvement year on year largely coming from fixed cost leverage. The 750 crore improvement on the back of higher volumes. You will see that the variable cost which is normally positive for us is a lot muted because the 2% costs reductions that we have done has completely gone to absorb the commodity increases that we’ve seen and last year we didn’t take any price increases.
The PLI year on year PLI benefit for the quarter was almost 300 crore. The PLI accruals for FY26 crossed 1000 crores. Next slide please. SCF for the quarter came in at about 1700 crore both from strong operating profits, favorable working capital and we also had about 500 crore benefit of tax refunds that came in this quarter. FCF for the India business for the year stood at about 1900 crore. Next slide please. Apex for the year stood at about 4,300 crore. That translated to about 7 and a half percent of revenues, well within the guidance range that we give from the combined CAPEX for PV and ED ot.
Shailesh Chandra — Managing Director
Thank you Diman. So quick business update. We delivered the record volumes and attained number 2 position H2 which was supported by GST 2.0. But let me first start with what happened in the industry first. After a muted first half which saw flat volumes and subdued consumer Sentiments the PV industry witnessed a rebound in H2 with 17% growth year on year profited by GST 2.0, a favorable monsoon and policy pavements like repo rate cuts, income tax relief and for the full year the PV industry touched a new high of 4.7 million units which was 8% year on year growth post GST 2.0 growth has been sharper for compact SUVs and mid SUV segments where our portfolio is well anchored.
At the same time there has been growing preference for greener powertrains with CNG and EV segments growing by over 20% and 80% year on year respectively. In particular, the EV sales have seen a step jump this year with over 2 lakh units sold driven which has been driven by greater participation of OEMs and more positivity among customers in April and May. Demand momentum for the industry has sustained at a very high level which augurs well for the coming months and quarters. That said, all OEMs will need to closely monitor the impact of ongoing geopolitical developments and take respective actions to mitigate the adverse business impact if it may come Talking about TMPV performance which is FY26, we have it has been a defining year for Tatamur’s PV.
We closed the year at a record 6.42 lakh units delivering over 15% growth year on year, nearly twice the pace of the broader industry which grew at 8%. The exit momentum has been equally encouraging. Q4 saw record volumes exceeding 2 lakh units for the first time with 37% growth year on year. We have really seen a step jump in our volumes in H2. During this period we consolidated our position as the number two player in the domestic market. Basis 1 Data with the market share crossing 14%, our products continue to see very strong demand across the board.
In particular, Nexon and Punch held number one and number three spots respectively among all models in the industry during H2FY26 reflecting deep and sustained customer preference for these two models. In addition, this was a year of intense launch actions for us which have really strengthened our product portfolio. Launch of the much awaited Sierra marked a highly successful comeback for the iconic product this year. At the same time, the launches of new Punch and Petrol versions of Harrier and Safari have strengthened our SUV portfolio.
On the back of product interventions in Tiago and Altroz in 2025 we were also able to drive industry beating growth in hatches and on the EV side, the introduction of Harrier EV and enhanced Punch EV has strengthened our portfolio and offered a better value proposition to customers as most of these launches were in the latter part of the year. We will benefit from the full year impact of these launches in FY27. Coming to EVs we recorded our best ever performance with 92,000 units sold 43% year on year growth.
We sustained our market leadership in EVs with over 40% share despite a significantly more competitive landscape with both established players and new players entering the fray. This outcome is a result of key launches this year as well as our deliberate efforts to lower adoption barriers for EVs through product offering, higher range, price parity with ICE, faster charging and lifetime warranty which was complemented by ecosystem initiatives like Tata TV megacharging hubs. CNG has also been a core driver of our growth in volumes.
CNG volumes are now 27% of our portfolio in the past year and our growth in CNG outpaces the industry as we sold over 1.7 lakh CNG vehicles. You can change the slide. Looking ahead for the industry, we see a constructive demand environment ahead which is reflecting in the first two months of the financial year. That said, we’ll have to closely monitor the West Asia situation with agility in our supply chain adverse impacts. DMP will look to deliver industry meeting growth in FY27 and for that our growth levers are well in place.
We have a healthy order book across models, lean channel inventory and are seeing strong sustained traction across models which will serve us well in the coming quarters. In addition, we’ll introduce new launches in a timely manner to strengthen our portfolio and enhance overall demand levels, drive retail momentum. We will leverage impactful marketing initiatives and expand our network while ensuring that the network remains healthy. One major focus area for us will be to ramp up production for new launches and enhance capacities to serve the demand levels that we are seeing.
We’ll also be mindful of the evolving geopolitical situation and will take proactive steps to build greater supply chain resilience. For the coming year. Key levers for our profitability will be improving mix operating leverage and cost reduction. Given the commodity cost headwinds that we are seeing currently due to the West Asia crisis, intense cost reduction actions will be crucial to offset some of the bottom line impact. And in the coming years, CNG and EVs will continue to be growth drivers for the industry.
Hence, we will capitalize on this trend with our strong CNG and EV portfolio along with key front inductions to drive growth. So to sum it up, FY26 has been a strong year for the business. The result reflects the cumulative impact of foundational actions that we have been taking over past 18 to 24 months combined with agile and disciplined execution especially in post GST 2.0 environment and as we enter FY27 with clear momentum and a well defined roadmap, you know to deliver industry beating growth.
So with that I hand over, hand it over back to Diman.
Dhiman Gupta — Chief Financial Officer and Executive Director
Thank you. Thank you Shellish and Richard. In short, I think the priorities ahead for us are very well laid out. Demand in India is healthy and the ramp up in production and supply chain resilience will remain our foremost priority along with mitigating actions for input cost increases that we are likely to see. EV mainstreaming actions involving extension of battery ranges and reducing the acquisition cost of vehicles are being executed at full speed and we shall see further actions through the year.
JLR is entering a crucial period which we’ll see it adds exciting new products to its house of brands and needs to be executed flawlessly. Enterprise cost out missions to deliver the 1.7 billion cens is is going to be a top priority so that we can take the cash breakeven volumes down to 300,000 again. Next slide please. Just to handle before you get before we get into the Q and A session, just wanted to remind you that we’ll have our sessions in June. Starts with Jaguar land Rover on June 17th and we’ll conclude with the India session on June 23rd.
So look forward to seeing you then. Thank you.
Unidentified Participant
Go to the publishman.
Questions and Answers:
Dhiman Gupta
Yeah Shelley should start with you. First question from first set of questions from beneath. Singh, do you could you give us a sense of what is the kind of commodity headwind that we’ve seen and we are likely to see and how we are thinking of passing it on Also the second question is how do we see our EV volumes step up from here. It’s been growing and does it is it expected to improve the net pricing? And the third one is on the percentage of portfolio where we are getting pli. I’ll take that at the end.
Shailesh Chandra
Okay. So quickly on commodity headwind. If we see a 9 to 12 month kind of a picture including you know how we are seeing things this quarter, the impact has been somewhere between 5 to 6% of revenue. Definitely affords a 5% and as demon already mentioned previously that we have not been able to pass it on any price increase last year, you know, because H1 there was a very low consumer sentiment and demand was under stress. And then in the second half government’s effort of bringing down the GST rates.
We could not take the price increase also to be aligned with the intention of what government had brought down the GST rates to. So definitely we have not been able to pass on this to the market. There have been intense cost reduction effort which has yielded us about 2% of revenue reduction. We also took about 0.5% increase in April. And the cost reduction efforts we are further intensifying and said that there will be still, you know, residual stress of commodity impact that we are seeing and therefore we are actively considering some level of price increase in the coming month but not decided as yet.
So that’s on Commodity headwind on EV volume run rate? Yes, it has been consistently around 24,000. Rather in quarter four we were at 27,000 roughly. We are consistently hitting a run rate of 9,000. Demand is extremely strong especially you know, after the Mid east crisis unfolded. Hopefully we’ll start ramping up further beyond 10,000 from this month onwards. So we are very, very optimistic about EV demand growing from here on and that’s it. These are the questions and then you have to answer that percentage
Dhiman Gupta
If you could. Also I think you spoke about Sierra volumes
Shailesh Chandra
As I said that, you know we had received tremendous response to Sierra, you know, when we had launched the car and since then the demand and bookings have been consistently coming very strong for us. You know the challenge has been on the supply side and particularly you know, this has been because of, you know, one or two suppliers, especially on the casting side. It’s a new engine as you know and we have faced a brand ramp up challenge but we have taken series of corrective action including additional, you know, suppliers to overcome not only the constraint that we have, you know, but to ramp up for, you know, the production of our engines.
But immediate milestone for us would be to cross 10,000 and then we have plans to further increase the production of Sierra in the coming months and next quarter we should also be launching the Sierra ev. So that will further require additional capacity. But all, all of this has been planned.
Dhiman Gupta
Thank you. Sharish Biden on your last question on PLI. Almost 2/3 of our volumes last year was, was accredited with pli. So that accounts for about thousand crore accruals that we took in last year. Moving on to the next question, Richard, this is coming your way. I think there are a lot of sub, there are a lot of related questions on this one and the next one. So I’ll ask them one by one. One is if you could give, I know we are not giving any specific guidance till our investor day. But anything you could want to mention on the demand conditions you see in your key geographies?
Richard Molyneux
Yeah, I think I covered that off in my, in my comments on the charts. I think North America as a region is still one. We have growth potential. Our brands resonate really well there. And if you look globally at where the high net worth and ultra high net worth individuals are, it’s still in the States. So the States still has opportunity for us. The UK and Europe are stable and China, as everybody knows, it’s been through a very, very difficult period, but we have readjusted our retailer numbers and also our retainer stock level and we see things, at least in the short term, stabilizing where they are.
Obviously the Middle East I’ve covered off in discussions and the other overseas markets are reasonably stable as well. So to be honest, the biggest issues that we’re facing, and again I mentioned this, are more on the supply side. As a result of the conflict in the Middle east and other issues, demand for the moment is slightly a secondary concern.
Dhiman Gupta
Okay, any update on the Range Rover EV launch timelines and what kind of pre bookings you’re seeing?
Richard Molyneux
Yep, coming very, very soon. It will be the first of our EV launches and we’ve got three, three reveals coming during the second half of this year. So we don’t have pre bookings, we have expressions of interest and there are 78,000 of those at the last count. So that’s where we stand. It’s coming, I’ve driven it and it is fabric,
Dhiman Gupta
I think. Another link question to this, that’s coming later. Any comments on with the expected fuel price increases we are seeing in Europe, is it doing, is are we seeing any shift in demand for EVs? And second is, does it has any implications on our investments or launch timelines for EVs?
Richard Molyneux
Yeah, so let me take that as well. So I think we’re seeing a couple of things. First of all, generally across the market there has been an increase in Internet search for EV vehicles over ICE vehicles. As consumers are really focused on the prices that they can see at the pumps, it’s affecting us a little bit less to an extent our consumer base, which is more in the high net worth individuals, they are less concerned than the average about the actual price of the pumps. But they do get concerned when there are issues around supply.
So where things stand at the moment, I don’t think that’s having a direct and significant impact on our demand. I’m sorry, there was a second part of your question as well, which I’VE forgotten.
Dhiman Gupta
Does it have any implications on our launch timelines or the investments on EVs as you’re seeing
Richard Molyneux
Launch timelines? No, it in and of itself that is the war in the Middle east is not going to change our investment plans on the assumption that it is resolved in a reasonable time frame. However, the geopolitical split between markets which are continuing to accelerate fast towards BEVs, those that are starting to accelerate fast in the other direction and those that are stuck in the middle does mean that we will have to rebalance our investments over time to ensure that we have ICE offerings globally for longer.
So we are in the middle of doing that. Nothing specific to announce today, but obviously like many manufacturers, we are going to need to ensure that we can offer both ice phev EM have and BEV offerings in parallel for longer than we originally thought we would need to.
Dhiman Gupta
Thank you. Next question Richard. How are we seeing the Chinese competition in Chinese OEM competition in increasing in Europe and UK and what does it mean for JLR and its also friends?
Richard Molyneux
So they’re, they’re definitely coming. The best plan that we have in relation to the Chinese imports is to rely on our brands essentially to fight them where they’re not. So we have vehicles that superbly embody the brands and the brands are very strong. So we expect to be able to use that to operate in a space where we have at least a level of protection versus these imports. Obviously there are also geopolitical issues as to tariff structures made in Europe and various other things that are going to play into this.
But at the moment, and it is working, we will use our strengths. The strengths are our brands and products that superbly embody them.
Dhiman Gupta
Thanks Richard. Moving on to the next question, this is, this is from Kapil India. EVs. Can you talk about the demand environment and you know, how long term are you thinking of EV profitability versus ice?
Shailesh Chandra
Okay, so demand for EVs has significantly grown since the Mid east crisis started. If I have to just you know, attribute what is the percentage of growth in that the bookings which has started flowing versus pre, you know, middle prices which started in Feb. I think the jump is nearly 25 to 30%. Our booking jump is much stronger also because of, you know, the new launches that we have done.
Richard Molyneux
So
Shailesh Chandra
Extremely strong demand issue is supply. It will completely depend on ramping up, you know, how fast we are able to ramp up the volumes. But as I already mentioned that from this month onward we are already trying to increase the production by additional 10% and future we are also ramping up. Beyond that it is all about alignment with the suppliers. The second question was more in terms of long term profitability of EVs. Already it’s quite strong, but it is also supported with pli. But I would say that long term, if you see the trajectory of cost as far as ICE vehicles are concerned, is inflationary because of the impending emission regulations.
Technology that will have to. You’ll have to embed the ICE vehicle to meet continuously stringent emission norms in the future is going to make it inflationary. Whereas the trend of cost is significantly deflationary in evs and that will continue. So therefore strong cost reduction programs. I mean even in the last three, four years there has been significant cost reduction much, much higher than ice. And therefore the combination of these two trends not only give opportunity for EVs to be completely at price parity, but also from a profitability perspective it will keep growing stronger.
Dhiman Gupta
Next two questions for you. One is, you know, the partnership with Freelander, with cjr are we taking planning to take Freelander globally? And the second question is what will be the revenue streams from JLR from Freelander?
P. B. Balaji
Yeah, thanks. Freelander is a, is a, is a JLR brand and it has been licensed to Cherry for manufacturing their car and it’ll be manufactured in the CJLR factory which is co owned by Cherry and JLR and therefore it is a. The products that we’ve been making in CJLR have run their course and this factory would have otherwise idled. Now we have a very extremely interesting proposition of resurrecting our brand Freelander which has been there with us for a long time and rebuilding it in. In while using the Chinese technology.
This Cherry’s car, other than the design aspect which we are involved in thereafter, it’s a Cherry car and it is going to be first sold in China and then they’ll have to make up their mind where they want to go thereafter. For our revenue stream, the main one is royalty for the brand that we are given to them. The brand is still owned by JLR and that’s the reason why we are involved in the design of it. As far as the other piece that will come through is that CJLR utilization and the total conversion will be the second revenue stream as 50% of that does come through and those are the two fundamental ones.
Dhiman Gupta
Thank you Balaji. Richard, I’ll hand over the next question to you. This is from Binet again, Mountain Stanley. JLR ASP stranded down quarter on quarter while the share of RR and Defender went up. If you could talk us through this. Also the gross margins went down quarter and quarter is and some color on inventory levels of JLR across the geographies amidst all the geopolitical issues you’re seeing on freight.
Richard Molyneux
Yep, sure. So ASPs were down marginally Q over Q. In sterling terms I think it was about 76,000. Yeah, 76,000 to about 72,000. Biggest individual elements in there are sterling which got stronger against the dollar quarter over quarter. So in Q4 it was about 136 I think and in Q3 much closer to 132.5. So that’s one impact. And obviously then there’s some regional mix issues as well. But the Range Rover, Range Rover Sport and Defender being stronger was the offsetting effect. Gross margins went down quarter over quarter.
That is a little bit to do with higher VME levels and also some charges that we had to take within the warranty space. So those are the two biggest impact there. Inventory is quite tight. So partly as a result of the lost production that we had through the cyber incident, we took retailer stocks down, particularly in the U.S. I mentioned this in my, in my talk earlier on. So we started the year with stock levels in the US that were a little bit too high, but deliberately because we had anticipated that tariffs would come in and we wanted to get the vehicles in market beforehand and at the end of this year they’re back probably even a tiny bit below where we would normally want them to be.
So we’re not with excessive inventory across any region. The US is not overstocked, obviously. Mena, at the moment we have some dealers that are actively running out of vehicles as it is more difficult to get them vehicles into their importer ships. So JLR inventory is in a better place at the end of FY26 than it was at the end of the Y25.
P. B. Balaji
Also Richard, just to add to that, philosophically being a luxury oem, we would want to keep our inventories tight and you should expect that to continue going forward as well.
Unidentified Participant
Yeah,
Dhiman Gupta
Thank you Richard. If you could take the next two questions. One is, follow on to jlr. What is the kind of inventory levels we are seeing in India? And second, you know, given the demand of some of the models, what’s the kind of waiting period you’re seeing?
Shailesh Chandra
Yeah, so quickly on dealer inventory we are right now at about 20 day level. So the waiting periods for us would be ranging from four to eight weeks. In general, I’m saying for certain models of course, like Seer and all it is quite high and so is for certain EVs in terms of the growth is the other question that you had asked. The growth, you know, from an industry perspective, if you see industry will grow very strong and you know, I’m pegging the number around 10% because the first half of, you know, last financial year was of a low base and therefore in H1 you’re going to see very strong double digit growth growth coming on the back of that because they said first one and a half months of this financial year the demand remains very strong, you know, carrying forward the momentum of gst.
And that will continue, you know, with some level of, you know, plus minus 1 or 2% depending on how the fuel prices play out in the coming months and how to what extent the commodity prices are passed on to the market. But I don’t foresee too much of a impact given that there was a 13% drop in GST which was done so significant headroom in terms of what can impact the consumer sentiment. So therefore I would still bet that industry will grow somewhere around 10% especially you know, it’ll be high double digit growth in H1 and then it will moderate in the H2 with the high base.
As far as Tata Motors is concerned, I think this year is going to be more a supply challenge for us rather than demand. Demand is significantly high for us and therefore the effort is to ramp up, enhance capacities both at our end as well as suppliers end. And we’d have a phenomenal industry beating growth. Because this year we already mentioned that last year we have launched in S2,3,4 models which I talked about. But this year also it’s going to be a intense product action year for us. These two new name plates and four phase tips that we are going to launch.
Four phase tips each for ICE and ev. So it’s an intense product action year. So we have to really work on the supply side.
Dhiman Gupta
Thanks Shalish. I’ll come back to you for the next question too. I think you mentioned about the commodity headwinds. If you could clarify whether the 5 to 7% increase in commodity prices are already in our P and L in Q4 or is it yet to come? And how should we look at the commodity headwinds going? So
Shailesh Chandra
You know, I’m just giving you a ballpark number of 5 to 6%. I would say 2, 2 and a half percent would have come last year and significant increase in this quarter which is expected beyond that. So roughly, you know, you can imagine 3 and a half to 4% increase which we are expecting this quarter.
Dhiman Gupta
Yeah, and Nishit, just on the last part, you know, it’s, it’s. The commodities are probably going to be elevated and also volatile and like I said in spot of our priorities cost mitigating actions need to be planned. We haven’t, we hadn’t taken any price increase last year and the entire 2% input cost increase get absorbed through cost reductions. We had announced a 0.5% price increase in April and obviously we’ll keep monitoring the situation and see if any. We can keep taking any measured price increases depending on how the market evolves.
Second is, you know, we’ve, you know our volumes have gone up by 50% and there’s been a massive effort in scaling up productions and our supply chain and as the volumes kind of normalize, we’ll be able to, you know, optimize and further benefit from fixed cost leverage. Third is, you know, our cost reduction programs are very, very robust. Not able to see the benefit last year because of the commodity increases that offset. But you know, given the robust volume increases that we are seeing, we should be be able to be in a good position to drive it up further.
But yes, this is how to offset this would be top of our redundancy.
Shailesh Chandra
I just wanted to add Demon that just to be careful in terms of how we are going to approach this whole situation as all the cost reduction levers Demon talked about, including you know, mix improvement, what we’ll pass on to the market will be, you know, which does not disturb too much of value creation for the customer. But whatever we must, you know, to also protect the margin. We would do that. But it will be a very careful balance between the two.
Unidentified Participant
Thank you.
Dhiman Gupta
Next question. Balaji, your way production of prevent to 3,000. You’ve been constantly. Sorry, 3,000. We’ve been constantly reducing the breakeven points for the last few years. How do you plan to do this? And in some way does it reflect our volume outlook? Also
P. B. Balaji
It’ll be fabulous if we can get to 3,000 units on break even. But that’s for another day. But having said that, getting this back to 300k. If you recollect that we did bring this business to breakevens of 320.300k to 320k not so long back. But since then there have been multiple moving parts. One of course is coming in, things have changed. The mix is starting to do very well for us. But of course as we go forward we’ll need to ensure the with evs coming in, we will be able to keep the mix then of course is with the currencies moving the way they have.
That has obviously meant that you also had a. Your main costs are in pound sterling, that that’s there. And lastly of course as commodity inflation everything kicks in, you will have a stress on that particular part of it. So therefore this is a number just like similar for Tata Motors. You are looking at costs everywhere. We will obviously have to do it from our end as well. We are fundamentally looking at three areas that we are going after for the 1.7 billion pounds. First is the entire end to end delivered cost all the way from raw materials.
If you look at our organization changes that we have put in place, we have stood up procurement as a separate vertical reporting into the board. So that’s a clear move to signal the importance of strategic procurement. Because in the recent past it has also meant that because of the challenges on supply chain we have been having consistently, it’s fair to say that we haven’t had the time and effort to actually focus on the strategic side of it. So that’s one area we are looking at. And of course as new products starts launching, you should be in a better position to manage the entire to the end to end supply chain.
That is number one. Second, an area which is not delivered for us is the whole warranty space. We’ve been talking about it for a while. While my IPTVs are improving, quality is improving, products are actually performing to what they’re expected to. Cost of repair is shot through the roof, particularly in markets like the US and other OEMs are also having the same challenge. So we need to up our game on that front. That’s the second area and of course amount of investments that we’ve done on it, digital, etc, it’s an area which needs to deliver productivity for us.
Cyber has shown that there are areas we could still do work in terms of simplifying our IT landscape, etc. So that’s the reason we put a CID on the board as well. So there is enough and more opportunities to look for on this. That’s the reason we have quantified it in a two year period to deliver £1.7 billion. So we should start working on that and start the numbers should start reflecting on the second half of this year itself. So that’s the whole plan.
Dhiman Gupta
Thank you Balaji. Richard, last question for the day. Spoke about vme. How do we, how are we looking at vme going into FY27?
Richard Molyneux
I think generally it is relatively stable. I think it Remains to be seen in China how the industry absorbs the extra 10% luxury tax that woods that was implemented in the, in the middle of last year. But we’re not seeing it rise considerably from the levels that we, that we saw at the back end of the last financial year.
Unidentified Participant
Thank you Richard. I’m just waiting for one more question that has come. I’ll just take that.
Dhiman Gupta
Yeah. Raghu, is there a decline in other expenses on jlr? Richard, if you could take this and I’ll take the last one. Is there a decline in other expenses for JLR year on year and quarter on quarter?
Richard Molyneux
Yes there is. You’ll find that the majority of that is actually exchange related in terms of a reasonably good hedge gain this year versus the opposite effect last year. So it’s largely that there is some central cost reductions in terms of very centralized expenses. But the biggest element within there is exchange.
Dhiman Gupta
Thank you Shailesh. If you could talk about exports and what’s the outlook for FY27?
Shailesh Chandra
So you know last year we had a four times jump in exports, you know, to 10,000 plus units. And this year also we are, we are targeting you know, anywhere between 70% to 100% kind of a group depending on you know, how we are able to ramp up our production and then open, you know further add to our portfolio and South African market. So that timing will be important so it can be anywhere between 70 to 100% growth.
Dhiman Gupta
Thank you Shailesh. And the last question for the day Raghu, the question is 471 crore PLI that we accrued in in Q4FY26. Was there any prior period item? Answer is yes, we had about 90 crores pertaining to Q3, you know which for which the product got certified in Q4 so we claim benefits. So without that the number would have been about 380 crores. Thank you and thank you everyone for joining our results call for Q4FY26. Just to remind you all our investor days are in June, 17 June for JLR and 23rd in India and we look forward to seeing you there.
And for any assistance that you might reach, please do reach out to our iit. Thank you and have a great evening.