Tata Motors reports mixed Q2 results amid challenges

Tata Motors Ltd (TML) announced its financial results for the second quarter of FY25, reporting consolidated revenues of ₹101,450 crore, down 3.5% year-over-year, amid various external challenges. The company's performance was marked by temporary supply constraints at JLR and softer demand in domestic markets.

The company delivered consolidated revenues of ₹101,450 crore, marking a decline of 3.5% compared to the previous year. EBITDA stood at ₹11,600 crore with a margin of 11.4%, down 230 basis points, while EBIT came in at 5.6% (down 190 bps). The company reported a net profit of ₹3,500 crore. For the first half of FY25, the business reported a strong PBT (bei) of ₹14,595 crore, showing an improvement of ₹2,895 crore over the previous year.

 Jaguar Land Rover (JLR) Performance

JLR faced significant challenges in Q2 FY25 but maintained its streak of eight consecutive profitable quarters. Revenue stood at £6,475 million, down 5.6%, with EBITDA margin at 11.7% (down 320 bps) and EBIT margin at 5.1% (down 220 bps). PBT (bei) came in at £398 million, down £44 million from the previous year. Free cash flow for the quarter was £(256) million, reflecting constrained production and wholesale volumes.

The performance was impacted by temporary aluminum supply constraints and a hold placed on 6,029 vehicles for additional quality control checks. However, the company saw strong demand for its premium vehicles, with over 2,900 orders for the new Defender OCTA priced at £145,000, and more than 48,000 clients on the waiting list for Range Rover Electric. The company has sold 11,000 Range Rover SV and Range Rover Sport SV models since launch, including the new Range Rover Sport SV Edition Two and a collection of five Range Rover Sport SV Celestial models retailing at approximately £215,000.

On the strategic front, JLR has invested £250 million of a total £500 million for electric vehicle production at the Halewood facility.

Commercial Vehicles (CV) Division

The CV segment encountered headwinds but maintained profitability through effective cost management. Revenue declined by 13.9% to ₹17,288 crore, though EBITDA margins improved to 10.8% (up 40 bps). EBIT margin stood at 7.8% (down 10 bps), with PBT (bei) at ₹1,314 crore, down ₹212 crore. Domestic wholesale volumes were at 79,800 units, down 19.6% year-over-year, while exports were at 4,400 units, down 11.1% year-over-year.

The division maintained strong market positions with a domestic Vahan market share of 38.1% in H1 FY25. Segment-wise shares stood at HGV+HMV 48.5%, MGV 38.6%, LGV 32.4%, and Passenger 37.2%. The company registered over 550 EV buses in Q2 FY25, with a total of over 3,300 EV Buses registered to date. Their Fleetedge platform reached 710,000+ active vehicles.

Passenger Vehicles (PV) Division

The PV segment demonstrated resilience despite market challenges. Revenue stood at ₹11,700 crore, down 3.9%, with EBITDA margin at 6.2% (down 30 bps) and EBIT at 0.1% (down 170 bps). PBT (bei) was ₹229 crore, down ₹67 crore. The ICE business delivered consistent 8.5% EBITDA margins, while EV business EBITDA was at negative 5% (positive 1.7% excluding product development expenses).

Volumes were at 130,500 units (down 6.1% yoy). The company maintained a VAHAN registration market share of 13.3% in H1 FY25 and continued its market leadership in EV at 65.0%, with EV personal segment market share at 67%. Alternative powertrains showed growth with EV penetration at 12% and CNG at 21% in H1 FY25. The Punch model achieved over 100,000 units sales in H1 FY25.

Outlook

Despite near-term challenges, Tata Motors maintains an optimistic outlook for the future. JLR maintains its full-year guidance for revenue of approximately £30 billion, alongside EBIT margin ≥8.5% and achieving a positive net cash position.

In the CV segment, with the rains easing, increased infrastructure spending, and the arrival of the festive season boosting consumption, the company anticipates demand to pick up gradually in Q3, led by ILMCV and Buses, followed by M&HCV and SCVPU segment.

For the PV segment, Q3 has started with a resurgence in industry demand during the festive season, with Tata Motors recording its highest ever monthly registrations of approximately 68,500 units during October, helping to bring down inventory to normal levels.

The group remains focused on driving growth, improving competitiveness, and generating free cash flows while navigating through current market challenges, aiming to become net debt free by this year.