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    Tata Motors

    TATAMOTORSNeutral
    Automobile and Auto Components·29 Jan 2025
    Management Summary

    Tata Motors delivered a solid Q3 FY25 with broad-based improvement across segments. JLR achieved record Q3 revenue driven by strong Range Rover/Defender mix despite China headwinds. India CV margins improved on cost savings and PLI despite volume softness. PV EV business hit a milestone with positive EBITDA excluding PLI. The demerger is on track and the group hosted a successful Bharat Mobility Global Expo with Sierra, Harrier EV and new Jaguar concept generating excitement.

    Highlights

    7

    • Group revenue up 2.7% YoY, EBIT up 60 bps to 8.9%

    • JLR posted highest-ever Q3 revenue at GBP 7.5 billion with 9% EBIT

    • India CV EBIT improved 100 bps to 9.6% despite 8.4% revenue decline

    • PV EV EBITDA turned positive at 1.7% even without PLI

    • PLI eligibility certificate received; Rs 142 Cr cash received, Rs 209 Cr accrued

    • Net auto debt reduced to Rs 19,200 Cr; domestic business back to net cash at Rs 700 Cr

    • Demerger progressing - appointed date expected July 1, effective date ~October 2025

    Concerns

    1

    • China market structural decline in premium ICE segment

    What Changed2

    vs Q4 FY25

    Tone shiftConfident on fundamentals but realistic about FY26 challenges from tariffs and macro → Cautiously optimistic - strong execution across segments with realistic acknowledgment of China and macro risksGuidance items7 → 6 (-1)
    Key financials

    Metrics

    15

    Periods

    3

    Headline

    8
    • Group Revenue Growth
      2.7%
      YoY+2.7%
    • Group EBIT Margin
      8.9%
    • Net Auto Debt
      ₹19,200 Cr
    • India CV EBIT Margin
      9.6%
    • India CV ROCE
      38.1%

    Q3

    6
    • Free Cash Flow
      ₹4,700 Cr
    • JLR Revenue
      $7.5B
    • JLR EBIT Margin
      9%
    • JLR Wholesales
      1,04,000 units
    • India CV Revenue
      ₹18,400 Cr
      YoY-8.4%

    ex-exceptional, YTD

    1
    • Group PBT
      ₹22,300 Cr

    Segment breakdown

    ₹7.5 Cr Revenue
    ₹18,400 Cr Revenue
    ₹12,400 Cr Revenue
    List

    Guidance & targets

    6
    CategoryTargetPriority
    JLR
    EBIT Margin (FY25)
    ~8.5%+ full year
    		Medium
    JLR
    Net Cash
    Net cash positive for FY25
    		Medium
    JLR
    Q4 EBIT
    >10%
    		Medium
    JLR
    Range Rover Electric Launch
    End of CY2025
    		High
    India PV
    Industry Growth FY26
    6-7%
    		Low
    Group
    India Capex
    ~8000
    		High

    Risks & concerns

    6
    RiskSeverity

    China market structural decline in premium ICE segment

    China only 9% of Q3 mix vs 15% last year. Locally produced cars down 27%. Uncertainty if decline is cyclical or structural. — Management acknowledged

    high

    Rising VME across auto industry

    Industry competition intensifying, no signs of easing. JLR brand equity provides some shield. — Management acknowledged

    medium

    JLR warranty costs elevated

    Quality improving but cost per repair rising. Significant warranty charge in Q3. — Management acknowledged

    medium

    Emission compliance costs

    If regulations don't change, emission costs will rise in FY26. Disconnect between BEV demand and regulation. — Management acknowledged

    medium

    India CV demand softness in M&HCV

    M&HCV industry down 13% YTD 9M. Q4 expected flat which would set good base for FY26. — Management acknowledged

    medium

    SCV market share loss to competition

    Post BSVI, SCV segment contracted losing ground to 3-wheelers and pickups due to price increases. — Analyst acknowledged

    medium

    Q&A highlights

    5

    “We are being cautious in China... maintaining inventory levels at dealers is also more important in China than it is in some other parts of the world.”

    China was only 9% of JLR Q3 mix vs 15% last year; management unsure if decline is cyclical or structural

    asked by Raghu, Nuwama

    1 min read4 chapters

    Detailed Narrative

    01

    JLR Record Q3 Despite Headwinds

    JLR delivered its highest-ever Q3 revenue at GBP 7.5B and best Q3 EBIT margin in a decade at 9%. Range Rover and Defender drove 70% of mix vs 62% prior year. US sales up 25% YTD. However, China declined sharply (9% of mix vs 15%), VME rose to 4.2%, and warranty costs were elevated. Management holding full-year EBIT and net cash guidance, requiring >10% EBIT in Q4.

    02

    India CV Margins Improve Despite Volume Decline

    CV revenue fell 8.4% YoY but EBIT improved 100 bps to 9.6% driven by cost savings and PLI accrual. ROCE remained robust at 38.1%. Electric bus fleet crossed 3,500 units. Ace EV volumes grew 40% YTD. Fleet Edge platform has 760K active vehicles. Q4 expected to be seasonally strong with improving utilization and sentiment.

    03

    PV EV Business Reaches Profitability Milestone

    PV+EV combined EBITDA at 7.8% including PLI impact of ~150 bps. EV EBITDA turned positive at 1.7% even without PLI - first time ever. Personal EV segment grew 15% YoY. Market share maintained above 53% despite intense competition. Curvv ramp-up issues being resolved; automatic variants launching in Q4.

    04

    Demerger and Corporate Actions on Track

    Demerger progressing well with NOC from exchanges/SEBI expected soon. Appointed date expected July 1, effective date ~October 2025. Tata Motors Finance merger awaiting NCLT final orders. PLI eligibility confirmed with Rs 142 Cr received and Rs 209 Cr accrued in Q3.

    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.