Tata Motors share price gains 3% post Q2 results on better second half FY25 expectations

Stock Market Today: Tata Motors share price gained almost 3% in morning trades on Monday and was among largest gainers in the Nifty 50 stocks on a day when benchmark indices saw volatility. While Tata Motors Q2 performance was subdued led by Weakness in Jaguar Land Rover margins, analysts say second Half FY25 should see improvement as margin challenges for JLR abate.

Tata Motors share price that opened at ₹801 on the NSE on Monday, slightly lower than previous close of ₹800.95. Tata Motors share price while dipped to lows of ₹792 , however rebounded to ₹829 levels marking gains of close to 3% .

Tata Motors soft Q2 performance

For the quarter that ended in September 2024 (Q2 FY25), the Tata Group company reported an 11% year-over-year (YoY) decline in consolidated net profit to ₹3,343 crore compared to ₹3,764 crore , in the same quarter last year.

While from ₹13,767 crore YoY to ₹11,567 crore, earnings before interest, tax, depreciation, and amortization (EBITDA) fell 16%, the EBITDA fell 230 basis points year over year to 11.4% in the face of a difficult external environment.

The weakness in margins was due to miss in Jaguar Lad Rover Margins said analysts. Tata Motors in its earnings presentation said that Q2 performance impacted by temporary supply constraints Full Year guidance unchanged at c. £30 billion revenue, EBIT margin ≥8.5% and positive net cash

Analyst views

Jefferies India Pvt Ltd said that Tata Motors Q2 Ebitda fell 15% YoY, and was 9% below Jefferies estimates on weaker JLR margin. While JLR is facing tough macro in China and Europe, 2Q was also impacted by aluminum supply constraints and delayed shipments. JLR expects a much better 2H and maintained its FY25 margin guidance. India CV and PV demand has slowed down too, but CV profitability is holding up well added Jefferies.

The volume slowdown for CY2024 has also been reported by JLR global peers said analysts . The commercial Vehicles sales volume for India business may also remains impacted due to high base and slowdown in road construction activities.

Nuvama Institutional Equities is building in a 2% revenue CAGR (compound annual growth rate) over FY24–27 versus a 21% CAGR over FY21–24, owing to weak volume growth at JLR (-3% CAGR) and the India Commercial Vehicle division (flat CAGR). In JLR, order book exhaustion, discontinuation of ‘Jaguar’ models, high base and weak demand across regions shall drive volume decline ahead, added Nuvama. Target price for Tata Motors share price by Nuvama stands at

Motilal Oswal Financial Services said that "while there is no doubt that Tata Motors delivered a robust performance across its key segments in FY24, there are clear headwinds ahead that could hurt its performance. Motilal Oswal has lowered our Ebida estimates for Tata Motors by 3% and 7% respectively for FY25/ and FY26 to factor in weakness in JLR business.

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