Tata Motors Q2 Results Preview: Revenue likely to grow by one-third, margin may improve by 480 bps

Tata group auto major Tata Motors—whose popular passenger cars include Nexon, Punch and Tiago—is scheduled to report its quarterly financial results on Thursday, November 2. The auto giant is widely expected to stage a strong financial performance for the July-September period on the back of robust demand for its new models and a steadily improving supply of semiconductors. 

According to Zee Business research, Tata Motors is likely to register a consolidated net profit of Rs 3,400 crore for the second quarter of the current financial year including a forex loss of Rs 624 crore, in stark contrast to a consolidated net loss of Rs 945 crore for the corresponding period a year ago excluding an exceptional gain of Rs 313 crore.

The analysts estimate the Tata group carmaker to report revenue growth of 33.3 per cent on a year-on-year basis to Rs 1,06,100 crore for the three months to September 30. The company is estimated to report Rs 13,400 crore in earnings before interest, taxes, depreciation and amortisation (EBITDA) for the quarter ended September 2023, more than double than Rs 6,196 crore a year ago. 

Zee Business analysts peg the company's margin—a key measure of profitability—for the fiscal second quarter at 12.6 per cent, translating to an improvement of 480 basis points (bps) on a year-on-year basis. They estimate the auto maker's quarterly passenger vehicle realisations to increase 4.4 per cent in the domestic market though its volumes are expected to decline 2.7 per cent.

According to Zee Business research, Tata Motors' commercial vehicle realisations are estimated to rise 18 per cent in the domestic market with a 4.2 per cent increase in volumes in the fiscal second quarter. The analysts expect Tata Motors subsidiary Jaguar Land Rover (JLR) to register a 6.5 per cent increase in sales realisations with a 19.7 per cent increase in volumes. 

What other analysts expect

According to Sharekhan, which has an overall positive view on the auto sector, Tata Motors is expected to register a consolidated net profit of Rs 4,426 crore and revenue of Rs 1,08,002 crore for the quarter ended September. The brokerage's revenue estimate implies year-on-year revenue growth of 35.7 per cent. 

Sharekhan has a 'buy' rating on Tata Motors shares with a price target of Rs 748, and has the Tata group carmaker among its preferred original equipment makers, besides Hero MotoCorp, Mahindra & Mahindra (M&M), Maruti Suzuki India, and Escorts. 

How the Tata group auto major performed in the June quarter

In July, Tata Motors exceeded analysts' expectations with its financial performance for the fiscal first quarter. The company reported a consolidated net profit of Rs 3,090 crore and revenue of Rs 1,02,236 crore for the June quarter. 

Zee Business analysts had estimated the auto manufacturer's net profit at Rs 2,000 crore and revenue at Rs  1,01,500 crore for the June quarter. 

Tata Motors' margin for the April-June period came in at 13.3 per cent, better than the analysts' expectations of 11.4 per cent. 

Tata Motors shares: Past performance

Tata Motors shares grew 5.9 per cent in the September quarter, sharply outperforming a 2.4 per cent rise in the headline Nifty index but underperforming a 6.8 per cent gain in the Nifty Auto gauge.

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