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Tata Motors Q2 net profit seen at ₹3,994 crore; revenue may rise 33% YoY


Tata Motors Q2 Results: Tata Motors, the passenger cars and commercial vehicle manufacturer, is set to announce its financial results for the quarter ended September 2023 today. The automobile major is expected to remain profitable during the quarter as against reporting a net loss in the corresponding quarter of last fiscal.

The automobile sector saw strong dispatches for SUV fueled by order book execution and improvement in supply chain situation. However, demand moderated for lower-end passenger vehicles (PV). Among all the segments, MHCV appeared to be better placed despite a drop in discounts, driven by healthy demand across most of the underlying industries, analysts said.

Read Tata Motors Q2 Results Live Updates here

Tata Motors, which also owns luxury car brand Jaguar Land Rover (JLR), is estimated to report a net profit of 3,994 crore in the second quarter of FY24 led by lower commodity prices, operating leverage and volume ramp-up at JLR, as per average estimates of six brokerages. 

The auto major is expected to report total revenue of 1,05,883 crore in the quarter ended September 2023, registering a growth of 33% from 79,611.4 crore in the year-ago quarter.

The company’s India business performance was a mixed bag as commercial vehicle (CV) volumes grew 3.5% YoY while passenger vehicle (PV) volumes fell 3% YoY. JLR volumes are expected to grow YoY due to easing chip shortage situation and continued traction in new models.

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At the operational level, Tata Motors’ earnings before interest, tax, depreciation and amortization (EBITDA) during the July-September quarter of FY24 is expected to jump by 130% to 14,257 crore from 6,196.2 crore in the same quarter last fiscal year, as per street estimates.

EBITDA margin is likely to improve by 572 basis points (bps) to 13.5% in Q2FY24 from 7.8%, YoY, led by raw material tailwinds and operating leverage benefits, partly offset by lower spares mix.

Brokerage firm Kotak Institutional Equities expects Tata Motors’ standalone business revenues to increase by 27% YoY in Q2FY24, led by 4% YoY improvement in volumes due to strong demand trends in MHCV trucks and passenger segment and 20-22% YoY increases in ASPs due to richer product mix, price hikes taken in the last one year and lower discounts as a percentage of average selling prices (ASP).

Also Read: Tata Steel posts 6,511 cr loss on Port Talbot impairment charge

“We expect JLR volumes (excluding China JV) to decline marginally by 1% QoQ due to summer holidays in the Europe region. Overall, we expect revenues (ex-China JV) to decline by 2% QoQ in Q2FY24,” Kotak Institutional Equities said.

The brokerage expects reported EBITDA margin to decline by 90 bps QoQ to 15.3% as Q1FY24 had a one-time benefit of 90-100 bps. As a result, it expects JLR EBIT margin to come in at 7.4% in 2QFY24. 

On a YoY basis, EBITDA is sharply up mainly on account of lower base as the company was facing supply chain issues during Q2FY23.

Tata Motors share price has remained largely flat since the past three months. However, Tata Motors shares have risen around 63% year-to-date (YTD) and the stock is up nearly 50% in the past one year.

At 11:35 am, Tata Motors shares were trading 0.78% higher at 632.25 apiece on the BSE. 

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Updated: 02 Nov 2023, 11:36 AM IST

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