Tata Motors Q2 preview: Co's profit may surge up to 49%, Ebitda by 34% YoY

Tata Motors Q2 preview: Automobile manufacturer Tata Motors will announce its September quarter of financial year 2025 (Q2FY25) results on Friday, November 08, 2024. 

 

Tata Motors’ performance is anticipated to be a mixed bag, with contrasting trends across its divisions. Brokerages have highlighted a generally flat revenue outlook year-over-year, tempered by muted volume growth but bolstered by an expected expansion in earnings before interest, tax, depreciation and amortisation (Ebitda) margins. 

 

Improved profitability in the Jaguar Land Rover (JLR) division, analysts believe, is a key driver, with gains expected from a richer model mix, although some challenges persist due to supply issues and moderating demand in global markets. 

 

 

In the domestic segment, both commercial vehicles (CV) and passenger vehicles (PV) face pressures from lower volumes and rising discounts, particularly impacting the India business. However, favourable commodity prices are expected to provide some cushioning, analysts opined.

 

Additionally, Tata Motors reported a slight decrease in both domestic and international sales for October, with a total of 82,682 units sold, compared to 82,954 units in the same month last year. 

 

Domestic sales saw a marginal increase to 80,839 units in October 2024, up from 80,825 units in October 2023. However, overall passenger vehicle (PV) sales, including electric vehicles, declined slightly to 48,423 units from 48,637 units a year ago. 

 

On the bourses, Tata Motors' shares have fallen over 15 per cent in the past six months, though the company has seen a 6 per cent increase year-to-date (YTD).

 

At 9:41 AM, Tata Motors' shares were down by 0.07 per cent at Rs 839.05, while the BSE Sensex was trading 0.56 per cent lower at 79,930.65 levels.

 

Given this, here’s a look at what brokerages expect from Tata Motors in Q2FY25:

 

Nuvama Institutional Equities

 

Nuvama Institutional Equities analysts expect Tata Motors' revenue to remain flat year-over-year due to muted volume performance across divisions. However, Ebitda margins are likely to expand, driven by improved profitability in Jaguar Land Rover (JLR), as well as the India commercial vehicle (CV) and passenger vehicle (PV) segments. Key focus areas, analysts believe, include demand and margin outlook across these divisions. 

 

They estimate revenue at Rs 1,05,467.9 crore (flat Y-o-Y), Ebitda at Rs 14,994.8 crore (up 9 per cent Y-o-Y), and adjusted PAT at Rs 5,168.7 crore (up 36 per cent Y-o-Y).

 

Motilal Oswal

 

Motilal Oswal points to weak performance in Tata Motors’ India operations, with CV and PV volumes down by 5 per cent and 19 per cent Y-o-Y, respectively. They expect CV Ebit margins to remain steady at 7.8 per cent, while PV Ebit margins may shrink to -0.9 per cent from 1.7 per cent in the previous year, impacted by rising discounts. 

 

JLR volumes are projected to decline 4 per cent due to supply issues, with the JLR Ebit margin narrowing to 6.8 per cent due to lower volumes and increased discounts. 

 

Analysts have cut their FY25E earnings per share (EPS) by 5 per cent to factor in moderating demand across businesses. Thus, expected revenue is Rs 1,00,183.4 crore (down 4.7 per cent Y-o-Y), Ebitda at Rs 13,257.4 crore (dwon 3.4 per cent Y-o-Y), and net profit at Rs 4,270 crore (up 10.3 per cent Y-o-Y).

 

Kotak Institutional Equities 

 

Those at Kotak Institutional Equities anticipate an 18 per cent decline in standalone revenue Y-o-Y, driven by a 19 per cent Y-o-Y drop in volumes. They expect Ebitda margin to dip 30 basis points, with the impact partially offset by favourable commodity prices. 

 

Additionally, the domestic PV business Ebitda is projected to fall to 5.2 per cent, affected by higher discounts and lower operating leverage. 

 

For JLR, excluding the China JV, volumes may decrease by 1 per cent Y-o-Y due to challenges in the EU and China. 

 

Despite this, Kotak Institutional Equities expects a 4 per cent Y-o-Y revenue (ex-China) increase driven by a richer model mix, boosting JLR's Ebitda margin by 50 basis points Y-o-Y. 

 

Consequently, analysts forecast includes revenue at Rs 1,06,941 crore (up 1.7 per cent Y-o-Y), Ebitda at Rs 14,653.9 crore (up 6.8 per cent Y-o-Y), and PAT at Rs 5,595.5 crore (up 48.7 per cent Y-o-Y).

 

YES Securities   

Analysts at YES Securities expect Tata Motors' consolidated revenue to grow 4.3 per cent Y-o-Y and 1.2 per cent Q-o-Q, reaching Rs 1,096.4 crore. Meanwhile, consolidated Ebitda margins are projected to rise 30 basis points Y-o-Y but decline by 100 basis points Q-o-Q, while adjusted PAT is anticipated to increase 29.6 per cent Y-o-Y, though it may see a 9.6 per cent drop sequentially.

 

Hence, revenue is expected at Rs 1,09,641.5 crore (up 4.3 per cent Y-o-Y), Ebitda at Rs 14,685.1 crore (up 34 per cent Y-o-Y), and PAT at Rs 5,220.7 crore (up 29.6 per cent Y-o-Y).