Tata Motors forecasts a better Q3 led by positive festive season; JLR maintains outlook

The Tata Motors stock has corrected nearly 22 percent in the last three months.

Tata Motors, India's largest electric vehicle player, is aiming for a strong lift in passenger vehicle retail growth, fueled by recent model rollouts and a targeted marketing push, according to its Q2 report released Friday.

Though it reported a 5 percent drop in registrations for Q2 FY25, Tata Motors anticipates a pickup in demand, spurred by the festive season, which the management says has kicked off well.

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"The passenger vehicle market saw a 5 percent drop in Q2 FY25 registrations, adding to inventory challenges across dealerships. The impact on EV sales was compounded by the phasing out of some subsidies," noted Shailesh Chandra, Managing Director at Tata Motors Passenger Vehicles and Tata Passenger Electric Mobility. "In response, we slowed our supplies to maintain manageable stock levels. Demand in Q3 has shown signs of revival thanks to a robust festive season," he added.

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This year's festive season began sooner than usual, with retail sales seeing double-digit growth while wholesale sales, representing shipments from automakers to dealerships, remained flat to slightly down. SUVs were the standout performers. At the industry level, SUVs have sustained volumes, posting 8 percent growth YoY, while hatches and sedans continue to lose salience with 20 percent YoY volume de-growth.

Despite blips, Tata Motors reiterated its full-year outlook for Jaguar Land Rover (JLR), anticipating stronger sales volumes, better cash flows, and a resolution to earlier supply chain setbacks in the latter half of the fiscal year.

During its Q2 earnings call, the company highlighted limited room for profitability growth, with ongoing challenges in the Chinese market and supply chain issues. The full-year forecast for JLR’s revenue is maintained at £30 billion, with an EBIT margin target above 8.5 percent and a goal of achieving positive net cash flow.

Management said that external challenges slowed things down in Q2, especially the flooding incident at the Nivelles facility, which limited production to 86,000 units. "Despite this, we still achieved solid profitability, underscoring the resilience of our business. We’re poised for a strong rebound in the second half," noted JLR CFO Richard Molyneux.

During the quarter, the Nexon marker's Q2 consolidated net profit fell 11.18 percent year-on-year to Rs 3,343 crore, missing expectations of Rs 5,038 crore projected by analysts. Revenue for the quarter was also down 3.5 percent YoY, totalling Rs 101,450 crore.

Shares of the company ended at Rs 805, lower by 2 percent from the last close on the NSE. The Tata Motors stock has corrected nearly 22 percent in the last three months.

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