Tata Motors' Q3 profit plunges 22% to ₹5,451 crore
What's the story
Tata Motors has reported a massive 22% year-on-year drop in its consolidated net profit for the third quarter of FY25.
The company's net profit stood at ₹5,451 crore, missing analysts' estimates. The downturn is attributed to weaker margins and slowdown in Jaguar Land Rover (JLR) sales.
This decline was despite an overall increase in sales resulting in a slight revenue rise of 2.7% year-on-year to ₹1,13,575 crore.
Financial indicators
EBITDA margins and EBIT show mixed results
Tata Motors' earnings before interest, tax, depreciation, and amortization (EBITDA) margins fell 60 basis points year-on-year to 13.7%.
This suggests higher costs or lower operating efficiency. However, its EBIT (which includes depreciation and amortization) improved by 60 basis points, reaching ₹10,000 crore.
This indicates that despite the margin decline at the EBITDA level, the company managed to improve its earnings after accounting for depreciation and amortization, possibly due to higher revenue or cost optimizations in other areas.
Segment performance
JLR and commercial vehicles segments face challenges
JLR, Tata Motors' luxury vehicle subsidiary, posted a record quarterly revenue of £7.5 billion, up 1.5% on-year.
However, its profit before tax (before exceptional items) was lower than last year at £523 million.
The Commercial Vehicles segment also struggled with an 8.4% on-year revenue drop to ₹18,431 crore amid weaker volumes and an unfavorable product mix.
Market trends
Passenger vehicles segment and EV sales
The Passenger Vehicles segment of Tata Motors saw a 4.3% fall in revenue to ₹12,354 crore.
However, EBITDA margin improved by 120 basis points to 7.8% on account of cost-cutting measures and Production Linked Incentive (PLI) incentives.
Notably, the company's electric vehicle (EV) sales in the personal segment witnessed a 19% on-year increase, but fleet sales were impacted by the lapse of FAME II subsidies.
Future prospects
Tata Motors' future outlook and market expectations
Tata Motors expects demand to improve gradually, supported by infrastructure spending, new product launches, and stable interest rates.
The company expects JLR's wholesale volumes to continue to grow in Q4. However, it is cautious about overall demand trends, particularly in China.
PB Balaji, Group CFO of Tata Motors said that despite external challenges they are confident of delivering another strong performance this year.