Ratings agency S&P Global has downgraded the outlook of Tata Motors Passenger Vehicles to 'negative' on the slow recovery of its British subsidiary, Jaguar Land Rover (JLR), which was recently hit by a major cyber attack.
S&P Global has estimated that JLR revenue will decline 15%-18% to about £24 billion in fiscal 2026 and its profitability will also take a hit because its investment intensity will remain steady. The company's S&P Global Ratings-adjusted EBITDA margins will decline to 3%-5% in fiscal 2026 from 7.6% in fiscal 2025.
The cyberattack, which began on August 31, has materially hampered JLR's operations. Production was completely halted throughout September and the first week of October. JLR recently reported that the groupwide system shutdown drove down wholesale and retail volumes in the September 2025 quarter by 24.2% and 17.1%, respectively, versus the same period a year ago.
Further, the impact of JLR's loss of volumes is more pronounced post the demerger. “We previously expected that the demerger of the commercial vehicles business would be neutral to our rating on Tata Motors PVs. We estimated the company's net debt-to-EBITDA ratio at about 1.0x at the time of the demerger,” said the rating agency.
“However, given the subsequent cyberattack at JLR since our forecast and the subsequent loss of revenue, we now project Tata Motors PVs' ratio of S&P Global Ratings-adjusted net debt to EBITDA will trend closer to 2.5x-3.0x in fiscals 2026 and 2027. Its ratio of funds from operations (FFO) to debt is also likely to weaken to 15%-25% in fiscals 2026 and 2027 (pro forma the demerger), from more than 100% in fiscal 2025,” it said.
JLR will account for more than 80% of Tata Motors PVs' earnings going forward, with the remaining being passenger vehicle sales primarily in India under the Tata brand.
Tata Motors demerged its commercial vehicles business into a separate legal entity, TML Commercial Vehicles Ltd., with effect from October 1, 2025. Commercial vehicles previously accounted for 15%-20% of revenue and up to 15% of reported EBITDA of the parent group. The segment generated higher returns on capital than other divisions, and carried low leverage.
S&P said that the path to recovery remains uncertain. “We believe a recovery in JLR's earnings is subject to a series of uncertainties both related to market conditions and to the consequences of the cyberattack. While JLR has resumed production operations, the ramp up to full capacity will likely be gradual.”
“Nonetheless, there could still be some permanent loss of production volume. This, in conjunction with U.S. tariff-related headwinds, and a potential delay in key product launches could pose further downside risks. Also, such risks would intensify if rising sales volumes in other regions are not enough to offset prolonged weakness in China,” said the ratings agency.
Under S&P’s base-case assumptions, JLR's revenue will grow 3%-7% while its S&P Global Ratings-adjusted EBITDA margin will improve to 4%-6% in fiscal 2027. This will translate to 6%-7% revenue growth and 5%-5.5% EBITDA margins at Tata Motors PVs during the same period. S&P’s estimates factor in the uncertainties and are thus lower than management forecasts.
S&P said that it could lower its rating on Tata Motors PVs if a recovery in JLR's earnings from the cyber incident is slower than they expect due to weak rebound in sales volumes, hit to the brand's reputation, and delay in new model launches.
