Tata Motors Q2 Results: On Friday, November 8, the automaker revealed its financial year 2025 second quarter results, which showed a drop in both revenue and profits.
While highlighting short-term difficulties, the company’s management expressed optimism for a recovery in the second half of the fiscal year. The following are the main conclusions from Tata Motor’s Q2 earnings:
PAT, income, and profit decline
For the quarter ending in September 2024 (Q2 FY25), the Tata group company reported an 11% year-over-year (YoY) decline in consolidated net profit to ₹3,343 crore. During the same time last year, the amount was ₹3,764 crore. In Q2 FY25, revenue was ₹100,534 crore, down 3.74 percent from ₹104,444 crore in the same period last year. From ₹13,767 crore YoY to ₹11,567 crore, earnings before interest, tax, depreciation, and amortization (EBITDA) fell 16%. In the meantime, the EBITDA fell 230 basis points year over year to 11.4% in the face of a difficult external environment.
Prospects: Short-term difficulties continue
Tata Motors stated that while it is still cautious about domestic demand in the near term, it anticipates a recovery aided by the holiday season and significant infrastructure spending. According to the report, JLR wholesales should see a significant improvement as supply issues subside. The company said in a press release, “Overall, we expect an all-around improvement in performance in H2 FY25 and the business to become net debt free by this year.”
“As previously mentioned, growth in the quarter was impacted by significant external challenges,” added PB Balaji, Group Chief Financial Officer, Tata Motors. The business’s fundamentals are still sound overall, and we are still committed to advancing our goals of increasing growth, competitiveness, and free cash flows.
We are optimistic that our performance will steadily improve and that we will produce a robust H2 as the supply issues subside and demand increases.
JLR’s revenue declines by 6%. Due to short-term supply constraints, Jaguar Land Rover’s (JLR) revenue for the quarter was £6.5 billion, a 5.6% decrease from Q2 FY24. In the aforementioned quarter, the EBIT margin fell 220 basis points to 5.1%.
The company claimed that a temporary shortage of aluminum and a hold on 6,029 vehicles for further quality control inspections had an effect on its profitability. It anticipates a robust recovery in H2 for both production and wholesale volumes.
As the aluminum supply situation stabilizes, it is anticipated that both production and wholesale volumes will increase significantly in the second half. We will keep up our careful cost control. In a press release, Tata Motors stated, “We continue to aim for a positive net cash position, an EBIT margin of ≥8.5%, and revenue of around £30 billion.”
CV sales and revenue decline
Domestic wholesale commercial vehicle (CV) volumes were 79.8K units in Q2 FY25, representing a 19.6% YoY decrease. According to the company, the main causes of this were a general decline in fleet utilization brought on by heavy rains, a slowdown in the execution of infrastructure projects, and decreased mining activity.
Exports were down 11.1% year over year at 4.4K units. At ₹17,300 crore, revenues fell 13.9% year over year. But thanks to commodity cost reductions, EBITDA margins increased to 10.8%, up 40 basis points year over year.
Going forward, we expect demand to gradually increase in Q3 as the rains subside, infrastructure spending rises, and the festive season boosts consumption. According to the company, the ILMCV and Buses segments are anticipated to lead this, with the M&HCV and SCVPU segments following.
Update on PV Business
Slow consumer demand and seasonal factors were the main causes of the 6.1% year-over-year (YoY) decline in passenger vehicle (PV) volumes, which stood at 130.5K units. Q2 FY25 revenues were ₹11,700 crore, a 3.9% YoY decrease. Despite low industry demand, EBITDA margins held steady at 6.2%, down 30 basis points year over year, thanks to lower material costs and a better product mix.
While the EV business reported an EBITDA margin of -5% in Q2 FY25, the PV (ICE) business consistently delivered EBITDA margins of 8.5%. However, the EV business saw positive EBITDA margins of 1.7% when product development costs were excluded.
In order to facilitate channel inventory reduction ahead of the new calendar year, we anticipate lower industry wholesale volumes in the near future, the company stated.
Through the introduction of new models and a comprehensive marketing campaign, we will concentrate on generating substantial growth in the retail industry while keeping channel inventory under control. In order to take advantage of changes in the industry and boost profitability through scale advantages, better mix, and more aggressive cost-cutting measures, we will keep fortifying our multi-powertrain strategy while negotiating a fiercely competitive landscape,” Tata Motors continued.
