Tata Motors Passenger Vehicles Q1 FY27 earnings call

Tata Motors Passenger Vehicles Limited reported consolidated revenues of Rs. 95,800 Cr for Q1 FY27, with EBIT margins at 2.4% and PBT at Rs. 1,600 Cr, which was down year-on-year. Consolidated net debt stood at Rs. 42,000 Cr at the end of the quarter. The overall profitability was impacted by JLR's wholesale decline and elevated commodity costs, necessitating strong performance in the remainder of the year to meet guidance.

The India business delivered strong performance, with revenues growing 65% year-on-year to Rs. 18,000 crores and wholesale volumes jumping 46% year-on-year to 182,000 units. This led to a 200 bps increase in market share to 14.3%. EV penetration reached 19% in Q1, exiting at 23% in June and July, with EV sales tracking 15,000 units per month. The company recorded Rs. 313 Cr in PLI accruals for the quarter, with full portfolio accreditation expected by Q4 FY27.

JLR experienced a challenging quarter with wholesales down approximately 10% year-over-year, partly due to a supplier fire and Middle East conflict. This resulted in a PBT of GBP 109 million and a negative free cash flow pre-working capital of GBP 352 million. The China market was particularly difficult, down 25% YoY. JLR is focused on launching six new vehicles, including four BEVs, and aims for 10% revenue growth per annum and $1.7 billion in cost savings, expecting EV volumes of around 12,000 cars in FY27.

Both India and JLR businesses faced margin pressures. India's EBITDA margins were flattish at 4% due to a 6% commodity impact in Q1, with another 3% hardening expected in Q2. Management indicated that price increases (1% cumulative across April and July) and structural cost reductions are being implemented to offset these headwinds, targeting flattish margins in Q2. JLR's profitability was impacted by market conditions pushing VME up, though EV models are expected to be margin neutral or accretive.

TMPV proactively refreshed and augmented its EV portfolio in India with the launch of the refreshed Tiago and Sierra.ev, which contributed to improved market position. JLR is nearing the peak of its investment cycle with six vehicle launches approaching, including the Range Rover Electric, Range Rover Sport Electric, and Jaguar Type 01, which will start production early next year. The Avinya EV launch has been rescheduled to 2027 from late 2026 due to a platform strategy shift to the Freelander platform of CJLR.

The India business remains net cash positive, generating FCF of Rs. 1,100 Cr in Q1, despite Capex of Rs. 1,300 Cr. Consolidated net debt stood at Rs. 42,000 Cr, with JLR's net debt at GBP 3.6 billion. JLR's working capital was negative GBP 1 billion in Q1, though expected to reverse through the year. The company is exploring a US manufacturing partnership with Stellantis for market-specific vehicles to provide a natural hedge against dollar exposure.