Tata Motors Passenger Vehicles shares declined 4.5 percent in early trade on Friday, emerging as the top loser on the Nifty 50, after the company reported weak Q1 FY27 results marked by a sharp fall in profit and continued pressure on margins. The stock was trading around Rs 334 after closing 1.92 percent higher at Rs 349.60 on Thursday ahead of the results. The shares are down around 9 percent so far in 2026, compared with a 6.7 percent decline in the Nifty 50.

Tata Motors Passenger Vehicles reported an 80 percent year on year decline in consolidated net profit attributable to shareholders to Rs 775 crore for Q1 FY27. Revenue from operations increased 9.2 percent year on year to Rs 95,799 crore, while profit before exceptional items and tax declined 59 percent to Rs 1,606 crore.

Performance was affected by pressure across both the Jaguar Land Rover and domestic passenger vehicle businesses. JLR wholesales declined 9.2 percent year on year due to temporary supply constraints, the Middle East conflict and the planned wind-down of Jaguar models. In the domestic business, revenue increased 65 percent, but elevated commodity costs and foreign exchange movements weighed on margins.

Consolidated free cash flow stood at negative Rs 11,800 crore, largely reflecting seasonal working capital requirements. The weak profitability and cash flow performance led most brokerages to adopt a cautious stance on the stock.

CLSA remained an exception, maintaining an Outperform rating with a target price of Rs 452, implying more than 29 percent upside from Thursday's closing price. The brokerage noted that JLR's EBIT margin was 90 basis points above its estimate, although domestic passenger vehicle EBITDA was below expectations. CLSA also highlighted management's confidence in achieving JLR's FY27 guidance of a 4 percent EBIT margin and breakeven free cash flow.

Management expects domestic passenger vehicle demand to remain strong, with inventory being built ahead of the festive season. Dispatches are expected to remain in the range of 65,000 to 70,000 units per month over the next few months.

Nomura retained a Neutral rating with a target price of Rs 389. The brokerage said Indian passenger vehicle demand remains healthy but highlighted significant cost pressures. For JLR, it identified new model launches as an important driver of the outlook, while noting continued challenges in China and potential opportunities in the US market.

HSBC maintained its Hold rating but reduced its target price to Rs 360. It said commodity-related margin pressure offset strong domestic demand during Q1 and could persist into Q2. HSBC also noted that JLR's recovery would depend on new models as its existing portfolio has aged and lowered its estimates to account for higher commodity and operating costs.

Citi remained the most bearish among the major brokerages, retaining a Sell rating with a target price of Rs 305. The brokerage said Q1 performance was significantly weaker than expected across both JLR and the India passenger vehicle business, citing severe cost headwinds and weaker-than-expected margin performance.

Despite the near-term pressure, management maintained a positive outlook for the Indian passenger vehicle business, guiding for high double digit domestic volume growth in FY27. For JLR, the company reiterated its guidance for double digit revenue growth and is focusing on four new launches planned in the near term.