Shares of Tata Motors rose 3.16% in intraday trade on Monday to ₹831 on the BSE after the automaker retained its full year revenue guidance for JLR at 30 billion pounds, alongside EBIT margin of 8.5% or above and achieving a positive net cash position by the end of the ongoing fiscal. In comparison, Indian benchmark indices, the BSE Sensex and the Nifty 50, were trading flat.
In a media conference call, Tata Motors group chief financial officer P.B. Balaji says the carmaker is keeping a close eye on China. “From a demand perspective, the market that we will watch like a hawk is China where we are seeing stress in the market. We are at a good place compared to market but that doesn’t mean that we are growing at an extent that we should be growing. The bigger challenge in China is credit availability for dealers. There has been a shrinkage in the number of dealer outlets. The compensating factor for China is the U.K. which us coming back strongly. Even if there is stress in China, we should be able to benefit from the U.K.,” Balaji says during the post-earnings call.
On commercial vehicles, Balaji expects infrastructure spending to gather pace in the second half and boost commercial vehicle sales. In passenger vehicles, the Tata Motors CFO says festive sales have been buoyant and inventory levels have gotten corrected recently. “If November holds and December comes back to normative levels, then I think the worst is behind us as far as passenger vehicle business is concerned,” he says.
Net profit of Tata Motors fell 11% year-on-year to ₹3,343 crore for the quarter ended September compared with ₹3,764 crore in the corresponding period last year, dragged down by a challenging external environment. Revenue from operations fell 3.5% year-on-year to ₹1.01 lakh crore during the second quarter.
Tata Motors’ earnings before interest, taxes, depreciation, and amortisation (EBITDA) stood at ₹11,600 crore or 11.4%, down 230 basis points.
Profitability in JLR was affected by temporary aluminium supply constraints which resulted in EBIT margins of 5.1% down 220 basis points.
Luxury unit JLR’s revenue was down by 5.6% to 6.5 billion pounds. JLR held its full year guidance for revenue of £30 billion, EBIT margin of 8.5% and achieving a positive net cash position.
Commercial vehicle revenues were down by 13.9% but EBITDA margins improved to 10.8% (up 40 bps) on favourable pricing and material cost savings despite adverse volumes. Passenger vehicle revenues were down by 3.9% but EBITDA margins were steady at 6.2% (down 30 bps) through mix improvements and cost reduction actions.
“We remain cautious on near-term domestic demand. However, the festive season and substantial investments in infrastructure should help bolster it. JLR wholesales are expected to improve sharply, as supply challenges ease. Overall, we expect an all-round improvement in performance in H2 FY25 and the business to become net debt free by this year,” the automaker says in a statement.
JLR delivered an eighth successive profitable quarter, despite temporary aluminum supply constraints. “JLR has delivered a resilient performance in Q2, resulting in a 25 per cent increase in first half profits year-on-year. Our teams responded brilliantly to the aluminum supply shortages we experienced in the quarter, so we could deliver as many orders as possible to clients. We continue to make good progress delivering our Reimagine strategy. We have invested £250m so far to prepare our Halewood UK plant for electric vehicle production and with strong global demand for our products, we are well positioned to deliver on our commitments again this financial year,” says JLR CEO Adrian Mardell.
