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    Tata Motors

    TATAMOTORSNeutral
    Automobile and Auto Components·8 Nov 2024
    Management Summary

    Tata Motors faced supply chain challenges in Q2 FY25, particularly at JLR due to aluminum supplier flood at Novelis. Despite these headwinds, the company demonstrated operational resilience with JLR maintaining positive EBIT margins and CV business sustaining profitability amid industry slowdown. The passenger vehicle business launched new products while maintaining market share, and management expects strong H2 performance as supply constraints ease.

    Highlights

    6

    • Revenue declined 3.5% YoY due to supply challenges at JLR

    • JLR delivered 9th consecutive quarter of positive EBIT despite production issues

    • CV business sustained double-digit EBITDA despite 11% industry volume decline

    • PV market share held steady at 13.3% in H1 FY25

    • EV business profitability improved despite price cuts

    • Launched new products: Nexon iCNG, Nexon.ev 45kWh, Curvv

    Concerns

    1

    • JLR supply chain disruption from aluminum supplier flood

    Key financials

    Single quarter

    06 metrics
    1. 01Revenue Growth-3.5%-3.5%YoY
    2. 02EBIT Margin5.6%-19%YoY
    3. 03PBT₹5,800 Cr-6.5%YoY
    4. 04Free Cash Flow₹1,700 Cr-5%YoY
    5. 05JLR Production86,000 units-10%YoY

    Guidance & targets

    3
    CategoryTargetPriority
    JLR Financial
    Revenue
    GBP 30 billion
    		Medium
    JLR Profitability
    EBIT Margin
    >=8.5%
    		Medium
    Group Cash
    Net Debt Position
    Net cash positive
    		High

    Risks & concerns

    3
    RiskSeverity

    JLR supply chain disruption from aluminum supplier flood

    Flood at Novelis aluminum supplier restricted JLR production to 86,000 units vs normal ~96,000, particularly impacting Range Rover and Range Rover Sport — Other acknowledged

    high

    China market deterioration for JLR

    Premium market down 12%, ICE market down 22% in China, retailer network under stress with insolvencies — Other acknowledged

    medium

    Commercial vehicle demand slowdown

    CV industry saw 11% volume decline YoY, daily truck utilization down 15-17% at lowest point — Other acknowledged

    medium

    Q&A highlights

    3

    “We are holding our guidance, but with very limited headroom left”

    Shows management acknowledging tight conditions but maintaining commitment

    asked by Kapil (Nomura)

    1 min read3 chapters

    Detailed Narrative

    01

    Supply Chain Resilience Tested

    Q2 FY25 tested Tata Motors' operational resilience with JLR facing significant supply constraints due to flooding at aluminum supplier Novelis. This restricted production to 86,000 units versus a normal run rate exceeding 96,000. Additionally, a quality hold on 6,000 units further impacted quarterly performance. Despite these challenges, JLR delivered its 9th consecutive quarter of positive EBIT, demonstrating underlying business strength.

    02

    Commercial Vehicles Weather Industry Storm

    The CV business showed remarkable resilience amid an 11% industry volume decline. Despite Tata Motors CV volumes falling 19% YoY, the business sustained double-digit EBITDA margins through disciplined pricing and cost management. The company maintained its market share at 38.1% and saw positive momentum in October with vehicle utilization returning to previous year levels.

    03

    PV Business Launches New Growth Drivers

    The passenger vehicle segment maintained market share at 13.3% while launching key new products including Curvv (both ICE and EV variants), Nexon iCNG, and Nexon.ev 45kWh. The Curvv launch showed strong initial response with 20% of bookings for the EV variant. EV business profitability improved despite strategic price cuts to drive mainstream adoption.

    This is an AI-generated summary of a publicly available earnings call transcript. It is for informational purposes only and does not constitute investment advice, a recommendation, or an endorsement. inve.money is not a SEBI-registered investment advisor. Please consult a qualified financial advisor before making any investment decisions.