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Informist, Wednesday, Aug. 6, 2025

 

By Anand JC

 

NEW DELHI – Tata Motors Ltd. is expected to report a double-digit on-year decline in its net profit and revenue for the June quarter, dragged down by poor wholesale sales, according to analysts. In addition, weaker operating leverage will likely impact its margin.

 

The company's consolidated net profit for the quarter ended June is expected to fall 40% on year to INR 33.3 billion, according to an average of estimates by eight analysts. However, these estimates vary widely – Nomura Equity Research's forecast of INR 8.6 billion is the lowest and YES Securities (India)'s estimate of INR 57.3 billion is the highest.

 

The Nexon-maker's consolidated revenue is expected to fall 17% on year to INR 895.1 billion, as per the average of eight analysts' estimates. Forecasts for the company's top line vary widely as well, with Nomura's forecast of INR 166.6 billion being the lowest and InCred Research Services' forecast of INR 1.041 trillion being the highest.

 

Excluding Nomura's estimates, expectations of the fall in net profit moderate to 34% while those of the fall in revenue moderate to 8%. Forecasts of a weak June quarter for Tata Motors factor in a poor sales performance.

 

The company's sales to dealerships in the June quarter declined 10% on year to 203,411 units. This included sales of 124,809 passenger vehicles, again down 10% on year, and sales of 85,606 commercial vehicles, down 6% on year.

 

"In Q1FY26, the passenger vehicle industry experienced volume pressure, particularly in May and June, with flat growth reflecting continued softness in demand," Tata Motors Passenger Vehicles Ltd.'s Managing Director Shailesh Chandra had said in July. Commercial vehicle sales were also weak as the industry saw a "muted" performance in the heavy commercial vehicle, small commercial vehicle, and the pick-up segments.

 

The contraction in Tata Motors' sales across segments likely hit its operating performance in the reporting quarter. According to an average of estimates from seven brokerages, Tata Motors' earnings before interest, taxes, depreciation and amortisation for the June quarter is likely to fall 41% on year to INR 92.3 billion.

 

WEAK DOMESTIC, JLR PERFORMANCE
Tata Motors earns over 70% of its total revenue from its UK-based subsidiary Jaguar Land Rover, which experienced a torrid quarter. The impact of US' tariffs on imports of automobiles and weakness in the China market troubled the maker of the Range Rover Velar.

 

Sales to the US form roughly a quarter of JLR's global sales. The company halted sales to the US for most of April, when US President Donald Trump announced tariffs on automobile imports into the country.

 

Despatches by JLR were weak during the June quarter. The company's wholesale sales fell 11% on year and 22% sequentially to 97,755 units. This excludes sales through its joint venture in China. This mix of poor sales amid weak demand during the latest quarter likely turned Tata Motors' operating leverage negative, analysts said.

 

Tata Motors' EBITDA margin for the June quarter is expected to decline 680 basis points on year to 9%, Kotak Institutional Equities said. This is due to the negative operating leverage, higher tariffs on US sales, and an adverse foreign exchange impact as the pound sterling appreciated against the US dollar.

 

While Kotak expects JLR's EBIT margin for Apr-Jun to fall 570 bps on quarter to 3.2%, HDFC Securities expects it to be 5.5%. The subsidiary had reported an EBIT margin of 8.9% for the June quarter a year ago and 10.7% for the March quarter, adjusted for one-time items.

 

STANDALONE BUSINESS
Kotak has forecast a 6?cline in the company's standalone revenue for the reporting quarter because of a contraction in despatches and flat average selling prices. The brokerage expects EBITDA margin of the passenger vehicle business to fall 100 bps on year to 6.8% due to negative operating leverage, higher marketing spends during the Indian Premier League, and commodity-related challenges.

 

However, a higher offering of sport utility vehicles in its overall portfolio is expected to offset some negative developments. Motilal Oswal expects the segment's EBITDA margin to fall 30 bps on year to 5.5%.

 

A higher mix of electric vehicles and launch costs for the electric Harrier are expected to drag down the segment's EBITDA margin, according to HDFC Securities.

 

The commercial vehicle segment, which is yet to recover after a lull last year, is expected to report an EBITDA margin of 10.7% for the June quarter, down 90 bps on year, Motilal Oswal said. Nomura Equity expects the segment's EBITDA margin to fall 160 bps on year to 10%, down from 11.6% in the year-ago quarter.

 

At 1514 IST, shares of Tata Motors traded at INR 652.40 on the National Stock Exchange, down 0.3% from the previous close. The stock has fallen roughly 9% since reporting its March quarter earnings on May 13. The company will detail its June quarter earnings Friday.

 

According to data from 16 brokerages available with Informist, nine have a 'buy' call, four have a 'hold' call, and three have a 'sell' call on the stock. Those with a buy call have an average target price of INR 837, implying an upside of roughly 28%.

 

Following are the June quarter consolidated earnings estimates for Tata Motors, in INR million, based on reports from eight brokerage firms in descending order of estimate of net profit:

 

Brokerage	Net Sales (in INR mln)	Net Profit (in INR mln)	EBITDA (in INR mln)
YES Securities (India) Ltd.	10,12,060.00	57,289.00	1,21,847.00
HDFC Securities Ltd.	10,10,285.00	43,560.00
Motilal Oswal Financial Services Ltd.	9,97,100.00	36,300.00	1,09,100.00
InCred Research Services Pvt Ltd.	10,41,818.00	35,964.00	1,28,637.00
Kotak Institutional Equities	9,80,053.00	31,215.00	90,120.00
JM Financial Institutional Securities Pvt Ltd.	9,72,047.00	27,133.00	90,014.00
Nuvama Wealth Management Ltd.	9,80,837.00	26,387.00	89,784.00
Nomura Equity Research	1,66,560.00	8,639.00	16,656.00
Average	8,95,095.00	33,310.88	92,308.29

 

End

 

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

 

Edited by Nishant Maher

 

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