Tata Motors clocks ₹3,764 crore profit in Q2

Tata Motors on Thursday reported a consolidated net profit of ₹3,764 crore for the quarter ended September compared with a loss of ₹945 crore in the year-ago period.

Revenue from operations jumped 32% year-on-year to ₹1.05 lakh core in the second quarter as against ₹79,611 crore in the corresponding quarter last year.

Earnings before interest, taxes, depreciation, and amortisation stood at ₹14,400 crore, up by 86.4% from ₹5,571 crore a year ago. EBIT margin improved 510 basis points (bps) to 7.5% in Q2.

Revenues of Tata Motors' subsidiary JLR improved by 30.4% to 6.9 billion pounds. Strong JLR wholesales and improved mix resulted in EBIT margins of 7.3%, up 630 basis points, the carmaker says.

Commercial vehicle revenues improved by 22.3% benefiting from higher realisations, a richer mix and favourable commodity prices, it says.

Domestic passenger vehicle revenues were down by 3% impacted by the transition to the new launches while EBIT margins improved by 140 basis points to 1.8% due to savings in commodity costs. "It was a transition quarter for us as we proactively reduced our supplies of outgoing models to enable a smooth transition to their next-gen avatars. This coupled with the fact that Q2 FY23 was our highest-ever sales, resulted in us reporting a marginal decline in revenues by 3% this quarter. The EV business posted strong sales growth of 55% during the quarter," says Shailesh Chandra, managing director Tata Motors Passenger vehicles and Tata Passenger Electric Mobility.

With a strong product pipeline, seasonally stronger second half of FY24 and continued focus on cash accretive growth, Tata Motors is confident of sustaining this momentum, says PB Balaji, group chief financial officer, Tata Motors.

Tata Motors remains optimistic on demand despite external challenges and anticipates a moderate inflationary environment. "We aim to deliver a stronger performance in H2, due to a healthy order book at JLR, strong demand for heavy trucks in CV and exciting new generation products in PV. Our financial performance is expected to improve further owing to a richer mix, continued low-break-even in JLR, execution of demand-pull strategy in CV and improving profitability in PV/EV," the automaker says.

JLR's order book remained strong with over 168,000 client orders, with Range Rover, RR Sport and Defender accounting for 77% of the order book. The carmaker plans to invest 15 billion over five years to transition to electric vehicles.

Tata Motors increased JLR's margin guidance from 6% to 8% for FY24. "Looking ahead, production and wholesale volumes are expected to gradually increase in H2 FY24. The EBIT margin for FY24 is now expected to improve to around 8% compared to the 6% plus previously indicated," it says.

JLR expects free cash flow of over 2 billion pounds in FY24 with net debt reducing to less than 1 billion pounds by the end of FY24. "We have delivered our best ever cashflow in the first half of this financial year and delivered another profitable quarter due to the strength of our financial performance. These results demonstrate the huge desirability of our modern luxury product portfolio and the skill of our hard-working teams who have increased production to ensure we can satisfy the substantial demand for our cars more quickly," says JLR chief executive officer Adrian Mardell.