Tata Motors (NYSE:TTM), the Indian automobile giant, has reported a consolidated net profit of Rs 3,764 crore ($501 million) for the second quarter of fiscal year 2024, marking its fourth consecutive quarter of profitability. The robust performance is largely attributed to the company's British luxury subsidiary, Jaguar Land Rover (JLR), which saw a 30.4% year-on-year revenue increase to £6.9 billion ($9.3 billion).
The company's total operational revenue also witnessed a significant rise, reaching Rs 1,05,128 crore ($14 billion), up from Rs 79,611 crore ($10.6 billion) in the previous year. On a standalone basis, Tata Motors reported a profit of Rs 1,270 crore ($169 million) for the third quarter.
The strong financial performance led to over a 4% surge in Tata Motors' share prices on Friday. The shares reached an intraday peak of Rs 665.45 ($8.87) and were later traded at a slightly lower value of Rs 653.25 ($8.70).
Brokerage firms Jefferies and Morgan Stanley issued optimistic outlooks for Tata Motors, emphasizing JLR's potential in the second half of the fiscal year due to expanded production capacity for Range Rover models and an elevated FY24 EBIT margin guidance from 6% to 8%. They acknowledged Tata Motors' successful debt reduction, improved free cash flow, reduced net debt for both JLR and Indian operations, stable growth in passenger vehicles, and expectations of market share growth in the domestic passenger vehicle business in FY25.
Despite JLR's EBITDA exceeding £1 billion for the third straight quarter, Jefferies highlighted a 9% quarter-on-quarter decline from Q1's high. Nevertheless, JLR projects higher Range Rover and Range Rover Sport capacity, which is expected to further boost the company's performance.
Tata Motors also licensed JLR's Electrified Modular Architecture (EMA) platform via a Memorandum of Understanding (MoU) between its subsidiaries. This move is expected to further strengthen the company's position in the growing electric vehicle market.
The company's stock has delivered a 64% return since the beginning of the year, and Tata Motors raised its FY24 EBIT margin guidance with stable growth in passenger vehicles. It maintained a double-digit EBITDA margin as JLR's supply-side issues eased and Indian business commodity price challenges stabilized.
InvestingPro Insights
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