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By Anand JC

 

MUMBAI – Tata Motors Ltd. is expected to report a mid-single-digit year-on-year fall in its bottom line for the June quarter, dragged down by higher costs despite a healthy increase in its top line, according to brokerages. The company's revenue from operations is seen to get a boost from higher overall sales in the reporting quarter, which would be partly offset by lower contribution of heavy commercial vehicles to the overall sales pie.

 

Tata Motors' standalone net profit for the June quarter is likely to contract a little over 5% on year to INR 13.40 billion, according to the average of estimates from eight brokerages. The lowest projection for the bottom line is INR 12.23 billion from Nuvama Wealth Management Ltd. and the highest is INR 14 billion from 360 ONE Capital Market Pvt. Ltd. The company had reported a net profit of INR 14.20 billion for the year-ago quarter.

 

Its standalone revenue from operations is expected to climb 24% on year to INR 194.58 billion, according to estimates. Projections for Tata Motors' revenue range between a low of INR 190.25 billion from Kotak Securities Ltd. and a high of INR 201.14 billion from 360 One Capital. The Tata group company reported net sales of INR 156.82 billion for the year-ago quarter.

 

The company's consolidated net profit is expected to be around INR 13.10 billion, down around 6% on year, according to two estimates. Elara Securities (India) Pvt. Ltd. expects Tata Motors' consolidated revenues to be INR 206.69 billion and Kotak Securities has pegged it at INR 208.31 billion -- both on-year gains of around 19%.

 

During the quarter, Tata Motors prioritised driving growth in its Model Year '26 portfolio, higher payload variants, and increasing its battery electric vehicle portfolio. The company wanted to rebuild its market share in the buses segment profitably while sustaining the pace of sales in small cargo vehicles.

 

Analysts expect Tata Motors' top line to gain primarily due to a robust increase in despatches of its commercial vehicles, despite June quarter being a seasonally weak period for the industry. The company sold 108,488 commercial vehicles in the reporting quarter, up 27% on year. This includes domestic sales of 100,348 units, up 26%, and exports of 8,140 units, up 35%. Small cargo vehicles and pickup vehicles form the bulk of its sales, followed by heavy trucks.

 

"We estimate standalone revenues to increase by 21% YoY driven by 27% YoY increase in volumes driven by strong growth across segments and 5-6% YoY decline in ASPs (average selling prices) due to lower mix of HCV (heavy commercial vehicles) and ILMCV (intermediate, light and medium commercial vehicles) segments and weaker product mix in passenger carriers segment," Kotak Securities said. The company will also gain from a lower base, new product launches, and inventory refilling, 360 One Capital said.

 

Tata Motors was carved out from its passenger vehicles business in September last year into a pure-play commercial vehicle company. The company had a market share of 34.07% as of Jun. 30, compared to 32.52% a year ago. The company has 11 manufacturing sites across India, and three additional research and development centres. Overseas, the company sells its commercial vehicles in Southeast Asia, Africa, and West Asia.

 

Its earnings before interest, tax, depreciation, and amortisation for the June quarter are seen at INR 20.84 billion, up a little over 10%, according to the average of five estimates. The lowest EBITDA estimate is INR 19.79 billion from Nuvama and the highest is INR 21.55 billion from Yes Securities (India) Ltd.

 

Tata Motors' EBITDA margin for the reporting quarter is projected to be weighed down by a rise in commodity prices and negative operating leverage, but the fall may be partly offset by price hikes and cost control measures. "While TMCV has taken price hikes to offset input cost pressure, we still expect the margin to contract 130 bps (basis points) YoY to 10.8%," Motilal Oswal Financial Services Ltd. said.

 

The company will disclose its financials for the June quarter Wednesday. On Tuesday, shares of Tata Motors closed flat at INR 450.05 on the National Stock Exchange. The stock has roughly gained 9% since the company announced its March quarter earnings on May 11.

 

Of the 13 research reports on the company available with Informist, 10 have a "buy" recommendation, with a target price of INR 473 per share, roughly 6?ove current market price. The remaining three have "hold" recommendations.

 

Following are the June quarter earnings estimates for Tata Motors from eight brokerages, in descending order of the estimate of standalone net profit, in INR billion:

 

Brokerages	Net sales	Net profit	EBITDA
360 ONE Capital Market Pvt. Ltd.	201.14	14.00	N.A.
HDFC Securities Ltd.	196.39	13.88	N.A.
YES Securities (India) Ltd.	194.25	13.85	21.55
ICICI Securities Ltd.	193.25	13.82	N.A.
Motilal Oswal Financial Services Ltd.	193.85	13.47	20.96
Kotak Securities Ltd.	190.25	13.29	20.97
JM Financial Institutional Securities Pvt. Ltd.	195.85	12.68	20.91
Nuvama Wealth Management Ltd.	191.61	12.23	19.79
Average	194.58	13.40	20.84

END

 

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Edited by Shubhayan Bhattacharya

 

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