Tata Motors Q2 FY25 Results: Revenue Drops, Shares Rise on Optimistic Outlook

Tata Motors' shares went up by more than 3% today, reaching ₹831.2 on the BSE.

This came after the company reported an 11.18% drop in its Q2 FY25 profit, which fell to ₹3,343 crore. This was lower than analysts' expectations of ₹5,038 crore.

Revenue also dropped by 3.5% YoY to ₹101,450 crore. Tata Motors said external challenges affected its performance. Its EBITDA margin decreased by 230 basis points YoY to 11.4%. The company also warned about weak domestic demand in the near term.

Tata Motors’ CFO, PB Balaji, said growth was affected by significant external challenges. However, he emphasized that the company’s fundamentals remain strong. Balaji is optimistic that performance will improve as supply challenges ease and demand picks up in the second half of FY25.

Jaguar Land Rover (JLR) revenue fell 5.6% to £6.5 billion because of supply issues, leading to lower margins. In commercial vehicles, revenue dropped 13.9%, but margins improved to 10.8% due to better pricing and cost savings.

Passenger vehicle revenue fell 3.9%, but margins stayed at 6.2%, thanks to cost-cutting and a better product mix. Tata Motors expects the festive season and infrastructure investments to help improve performance.

The company expects JLR’s wholesales to improve as supply issues ease. Tata Motors also aims to become net debt-free by the end of FY25.

Brokerage firm CLSA upgraded Tata Motors to ‘Outperform’ from ‘Hold’. However, it lowered the target price to ₹968 from ₹975. The company’s EBIT margin guidance for JLR at 10% for FY26 remains unchanged.

Jefferies also maintained its ‘Buy’ rating but reduced its target price to ₹1000 from ₹1330.

The company reported weaker-than-expected Q2 results.

Despite issues with JLR due to market conditions and supply problems, Jefferies expects better performance in the second half of the year. While demand for vehicles in India has slowed, commercial vehicle profits are still strong.