Tata Motors share price in focus ahead of Q2 results today: Here is what analysts expect

Stock Market Today: Tata Motors share price has declined sharply by over 11% in the last one month amid a correction in the benchmark indices. Tata Motors share price was down around 1% in morning trades on Friday ahead of the earnings announcement by the auto major for the quarter ended September 2024 (Q2) today. As per analysts, Tata Motors is likely to post a mixed-bag performance for Q2.

Demand dynamics and industry scenario

The demand outlook for commercial vehicles remains subdued, while moderate growth in passenger vehicle demand also raises concerns. Discounts are likely to have increased and will be closely monitored in light of the soft demand during the period. Meanwhile, the channel inventory buildup ahead of festive season sales may bring some respite and favourable commodity prices bode well as does better model mix in passenger vehicles. However, not much is expected from Jaguar Land Rover sales amidst supply challenges. 

Here is what analysts expect from Tata Motors Q2 results:

Q2 analysts expectations

Tata Motors India business performance was weak as both passenger vehicles and commercial vehicles volumes declined by 5% and 19% year-on-year (YoY), respectively, according to  Motilal Oswal Financial Services (MOFSL).

The commercial vehicles' earnings before interest and tax (EBIT) margin is likely to remain flat at 7.8% on a YoY basis. Passenger vehicles' EBIT margin, however, is likely to contract to -0.9% in Q2 from 1.7% in the same quarter last year due to rising discounts, said analysts at MOFSL.

Meanwhile, Jaguar Land Rover volumes are expected to see a 4% YoY decline due to supply challenges, as per MOFSL, which estimates an EBIT margin of 6.8% for Jaguar Land Rover (down 50bp sequentially), primarily due to lower volumes and rising discounts.

At the consolidated level, MOFSL expects a net operating income of ₹1,00,180 crore for Tata Motors, down 4.7% YoY. Earnings before interest tax depreciation and amortisation (EBITDA) may decline from ₹13,720 crore in the year-ago quarter to ₹13,260 crore in Q2FY25, however, EBITDA margins are likely to come in at 13.2% and still may remain comparable to 13.1% posted in the year-ago quarter, as per MOFSL. 

The brokerage expects net profit to be at ₹4,240 crore, up from around ₹3,780 crore in the year-ago quarter but lower than ₹5,560 crore posted in the previous quarter.

Elara Securities India Pvt Ltd, on the other hand, expects net profit for Tata Motors at ₹5,353 crore, only marginally lower than the June 2024 quarter but much higher than the September 2023 quarter. Analysts at Elara Securities said that they are building in a slight sequential deviation in average selling price (ASP) for most OEMs except Tata Motors in the passenger vehicles segment. 

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions