Tata Motors reported an 11.18 per cent decline in its consolidated net profit at ₹3,343 crore in the September quarter compared to ₹3,764 crore in the corresponding period last fiscal.
The decline is a result of lower sales volumes due to supply constraints and a weak performance of its passenger and commercial vehicles as well as its Jaguar Land Rover (JLR) segments. Supply crunch cost Tata Motors a negative cash flow of ₹2,900 crore, in addition to a net automotive debt of ₹22,000 crore during the quarter.
The company’s profit dropped 40 per cent from the June quarter (₹5,566 crore).
The industry giant posted a 3.76 per cent year-on-year decline in its revenue from operations, with ₹1,00,534 crore for the September quarter compared to ₹1,04,444 crore in the year-ago period. The same dropped 6.31 per cent, with ₹1,06,316 crore reported during the June quarter.
“Growth in the quarter was impacted due to significant external challenges as highlighted earlier. Overall, the business fundamentals remain strong, and we remain focused on our agenda of driving growth, competitiveness and free cash flows. As the supply challenges ease and demand picks up, we are confident of steady improvement in our performance and delivering a strong H2,” said PB Balaji, Group Chief Financial Officer, Tata Motors.
Passenger vehicle sales
Tata Motors’ passenger vehicle revenue stood at ₹11,700 crore, down 3.9 per cent y-o-y.
“The PV industry in Q2FY25 witnessed a 5 per cent decline in registrations, resulting in a continued build-up of channel inventory. EV sales were additionally impacted by the lapse of certain subsidies. We moderated our offtakes in Q2 to proactively keep our channel inventory under control. Q3 has started with a resurgence in industry demand on the back of a robust festive season. Tata Motors recorded its highest-ever monthly registrations of ~68.5k during October, which helped bring down the inventory to normal levels. Our multi-powertrain suite of Curvv, Nexon iCNG and Nexon Ev 45 has garnered strong consumer interest as we continue to ramp up deliveries in Q3,” said Shailesh Chandra, Managing Director of TMPV and TPEM.
The company’s CNG penetration was at 21 per cent in H1FY25, while that of the electric vehicle segment stood at 12 per cent.
The commercial vehicle business generated ₹17,300 crore in revenue down 13.9 per cent during the quarter with domestic sales of 79,800 units. Exports during the quarter were down 11.1 per cent to 4,400 units.
JLR’s revenue down
Tata Motors JLR revenue was down 5.6 per cent at £6.5 billion. JLR’s net debt was £1.2 billion, with gross debt of £4.6 billion. The company stated that JLR has increased investment from £15 billion to £18 billion over five years to support the delivery of the ‘Reimagine’ strategy.
“JLR has delivered a resilient performance in Q2, resulting in a 25 per cent increase in first-half profits year-on-year. Our teams responded brilliantly to the aluminium supply shortages we experienced in the quarter, so we could deliver as many orders as possible to clients. We continue to make good progress in delivering our Reimagine strategy. We have invested £250m so far to prepare our Halewood UK plant for electric vehicle production and with strong global demand for our products, we are well-positioned to deliver on our commitments again this financial year,” said Adrian Mardell, Chief Executive Officer of JLR.
Inventory levels
The company pointed out that sales in October were stronger than expected with stocks cleared of 25,000 vehicles.
“The quarter demand has been weak, with a combination of factors. An unsustainable level of inventory was built up. However, the inventory is cleared and now we stand at 33 days. There has been a good turnaround as far as volume pick-up from this quarter (is concerned). Going forward, we are looking at an industry growth between 4 and 5 per cent. If the festive growth demand sustains itself then the worst is behind us. November will be a pivotal month,” added PB Balaji.