Synopsis: Tata Motors is set to announce its Q3 FY24 earnings on January 29, 2024. Brokerages project mixed performance, with varied expectations for revenue, margins, and profitability. EBITDA margins remain a concern, particularly for JLR (Jaguar Land Rover), amid rising discounts and an unfavourable product mix. Revenue growth is anticipated, driven by JLR’s performance and improved realizations.
Tata Motors Ltd is scheduled to release its financial results for the quarter ended December 2024 on January 29. Analysts and brokerage firms have shared varied projections, highlighting both opportunities and challenges for the automotive giant.
Revenue Expectations:
Deven Choksey Research projects an 8.0% year-on-year (YoY) rise in consolidated revenue, largely driven by JLR’s ex. Chery sales volume growth and higher average realizations.
YES Securities forecasts even stronger revenue growth, expecting an 11.1% YoY increase (+21.1% quarter-on-quarter [QoQ]), bringing consolidated revenue to approximately Rs 1,22,840 crore.
Margin Analysis:
Margin performance remains a focal point for analysts:
- Deven Choksey Research: EBITDA margins are expected to decline by 52 basis points (bps) YoY due to negative operating leverage and an unfavorable product mix. However, sequentially, margins may improve by 178 bps, benefiting from positive operating leverage.
- Motilal Oswal: The brokerage expects significant pressure on margins, with a 270 bps YoY contraction for JLR due to rising discounts. This has led to a 5.5% reduction in its FY26E EPS estimates, reflecting continued challenges for the JLR business.
- YES Securities: Consolidated EBITDA margins are anticipated to expand by 190 bps YoY (+530 bps QoQ) to 15.8%, supported by a sharp improvement in JLR’s profitability.
Profitability Outlook:
Expectations for net profit also vary:
- Motilal Oswal estimates a decline in net profit by 4.5% YoY, citing a higher base effect. It forecasts Q3 net profit at Rs 6,550 crore compared to Rs 7,030 crore in the same quarter last year.
- YES Securities offers a more optimistic view, projecting a 5.9% YoY increase in net profit to Rs 7,791.7 crore (+119% QoQ).
- In the previous quarter (Q2 FY24), Tata Motors reported an 11% YoY decline in net profit to Rs 3,343 crore, alongside revenue of Rs 1.01 lakh crore.
Jaguar Land Rover (JLR) Performance:
JLR remains a critical component of Tata Motors’ financials:
- Motilal Oswal expects JLR’s volumes to remain flat YoY and notes that rising discounts are weighing heavily on margins.
- YES Securities highlights an expected sharp improvement in JLR’s profitability QoQ, driving overall growth in adjusted profit after tax (PAT).
Conclusion:
Tata Motors’ Q3 earnings are expected to reflect a combination of revenue growth and margin challenges.
While JLR’s performance remains pivotal, analysts’ views on profitability and margins differ, painting a mixed picture.
Investors will closely watch the company’s ability to navigate margin pressures while leveraging operational efficiencies and volume growth.
