Tata Motors Q2 profit and margin fall; firm cautious on near-term domestic demand

Homegrown auto major Tata Motors on Friday, November 8, reported a 11% year-on-year decline in net profit at ₹3,343 crore for the September quarter. The company had reported a net profit of ₹3,764 crore in the year-ago quarter.

Revenue for Tata Motors stood at ₹1.01 lakh crore at the end of the second quarter, a drop from last year's topline figure of ₹1.05 lakh crore. Average revenue estimates from analysts stood at ₹1.03 lakh crore.

Tata Motors' Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA) declined by 19% from last year to ₹12,159 crore, while margins narrowed by 110 basis points to 12% from 13.1% during the September quarter last year. The figure was below ₹13,954 crore average analyst estimate.

The Mumbai-headquartered company said it remains cautious on the near-term domestic demand. However, the festive season and substantial investments in infrastructure should help bolster it.

JLR revenue was down by 5.6% to £6.5 billion. As highlighted last quarter, the company said that JLR's performance was impacted by temporary supply constraints, which resulted in EBIT margins of 5.1% (down 220 basis points).

The commercial vehicle revenues were down by 13.9% but EBITDA margins improved to 10.8% (up 40 basis points) on favourable pricing and material cost savings despite adverse volumes.

The passenger vehicle revenues were down by 3.9% but EBITDA margins were steady at 6.2% (down 30 basis points) through mix improvements and cost reduction actions.

JLR wholesales are expected to improve sharply, as supply challenges ease. Overall, the company expects an all-round improvement in performance in the second half of FY25 and the business to become net debt free by this year.

"Growth in the quarter was impacted due to significant external challenges as highlighted earlier. Overall, the business fundamentals remain strong, and we remain focused on our agenda of driving growth, competitiveness and free cash flows. As the supply challenges ease and demand picks up, we are confident of steady improvement in our performance and delivering a strong H2," said PB Balaji, Group Chief Financial Officer at Tata Motors.

Shares of Tata Motors Ltd. settled about 2% lower on Friday at ₹803.55 in a weak market, where the Nifty 50 has shed 0.21% to end at 24,148.20.