What To Expect From Tata Motors' Q1 Results

Tata Motors is expected to release its results for the quarter ended June in the last week of July or early August.

What Are Brokerages Saying? Analysts are mixed about the company’s upcoming results. Motilal Oswal, in its preview note on the auto sector, said that the Tata Group company’s numbers will be behind its peers. While Kotak Securities has a brighter outlook for the automobile behemoth.

In the India business, commercial vehicle (CV) volumes grew by 6% year-over-year (YoY), while passenger vehicle (PV) volumes declined by 1% YoY. Motilal Oswal expects the EBIT margin for commercial and passenger vehicles to contract by 190 basis points (bp) and 50 bp quarter-over-quarter (QoQ), respectively, attributed to lower volumes.

For Jaguar Land Rover (JLR), the brokerage noted that volumes grew by 3% YoY. However, the estimated EBIT margin for JLR is 7.5%, which reflects a decrease of 170 bp QoQ. This decline is driven by an unfavourable product mix, rising expenditures, and lower volumes.

Overall, Motilal Oswal expects Tata Motors’ consolidated entity to post an 8.5% YoY growth in Q1 earnings. “Tata Motors is likely to underperform peers with 8.5% YoY earnings growth,” the analysts added. The brokerage expects Tata Motors to post a revenue of around ₹1.03 lakh crore with a profit after tax of around ₹4,000 crore. The brokerage house has a “neutral” rating for the stock with a price target of ₹960.

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Kotak Securities expects standalone business revenues for Tata Motors to increase by 9% year-over-year (YoY) in the June quarter. This growth is attributed to a 6% YoY increase in volumes, partly due to a lower base, and a 2-3% YoY rise in average selling prices (ASPs) resulting from price hikes over the past year. Overall, the EBITDA margin is projected to improve by 160 basis points (bps) YoY to 10%, driven by the benefits of operating leverage and a richer product mix.

In the domestic passenger vehicle (PV) business, Kotak anticipates the EBITDA margin to decline to 6.8% (-50 bps quarter-over-quarter) for the April-June period. This decline is expected due to negative operating leverage and higher discounts, although it will be partly offset by commodity tailwinds in the electric vehicle (EV) segment due to a decline in battery prices.

For Jaguar Land Rover (JLR), excluding the China joint venture (JV), volumes are expected to increase by 9% YoY, led by strong growth in the Range Rover, Range Rover Sport, and Defender model volumes. Overall, revenues (excluding China JV) are expected to rise by 6% YoY in Q1 FY25.

However, the reported EBITDA margin for JLR is anticipated to decline by 20 bps YoY to 16.1%, driven by higher variable marketing expenses (VME) and marketing spending, offset by operating leverage benefits. As a result, Kotak expects the EBIT margin for JLR to be 8.6% in Q1 FY25.

The analysts expect the auto giant to post a revenue of ₹1.18 lakh crore with a net profit of ₹6,018 crore. It has an “add” rating on the stock with a price target of ₹1,100.

Read Next: Tata Motors’ JLR Sees Retail Sales Jump 9% In Q1, Wholesale Volumes Up 5%

Disclaimer: This content was partially produced with the help of Benzinga Neuro and was reviewed and published by Benzinga editors.

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Posted In: EarningsEquitiesNewsMarketsKotak Institutional EquitiesMotilal OswalTata GroupTata Motors