 |
|
Tata Motors, a prominent Indian multinational automotive manufacturing company, has reported a significant decline in its standalone net profit for the second quarter (Q2) of the current financial year. The company's profit fell by 62.4% year-on-year, reaching Rs 477 crore compared to Rs 1270 crore in the same period last year. This result fell short of market expectations, highlighting the challenges faced by the company in the current economic climate.
The decline in profit was accompanied by a 16.3% year-on-year drop in revenue from operations, which reached Rs 15,518 crore in Q2, down from Rs 18,542 crore in the corresponding period last year. The company attributed the decline in revenue to various factors, including slow consumer demand in the passenger vehicle segment, seasonal factors, and temporary aluminum supply constraints impacting Jaguar Land Rover (JLR) production. Additionally, commercial vehicle sales were affected by a slowdown in infrastructure project execution, reduced mining activity, and a decrease in fleet utilization due to heavy rains.
In the passenger vehicle segment, Tata Motors saw a 6.1% decline in volumes, reaching 1,30,500 units due to slow consumer demand and seasonal factors. The company also acknowledged the impact of certain subsidy lapses on electric vehicle sales. However, the company expressed optimism for the upcoming quarter, citing a resurgence in industry demand driven by the festive season. Tata Motors recorded its highest-ever monthly registrations of about 68.5k in October, which helped bring down channel inventory to normal levels.
Jaguar Land Rover's revenue for the quarter was down 5.6% year-on-year to £6.5 billion, impacted by temporary aluminum supply constraints. The company also held back nearly 6,029 vehicles for additional quality checks. Despite the decline, the company maintained its full-year revenue guidance at £30 billion. JLR's profitability was affected by lower wholesales and increased marketing expenses and selling costs, partially offset by prioritizing Range Rover production and material cost improvements.
Tata Commercial Vehicles (Tata CV) also witnessed a decline in revenue, reaching Rs 17,300 crore, a 13.9% decrease year-on-year. Domestic wholesale CV volumes fell by 19.6% to 79,800 units, impacted by a slowdown in infrastructure project execution, reduced mining activity, and decreased fleet utilization due to heavy rains. However, the company anticipates a demand pickup in the coming months with the easing of rains, increased infrastructure spending, and the arrival of the festive season.
Looking ahead, Tata Motors expects a better performance in the second half of the fiscal year, driven by easing supply challenges and an uptick in demand. The company remains optimistic about its long-term growth prospects, particularly in the passenger vehicle and commercial vehicle segments, where investments in infrastructure and new technologies are expected to drive future growth.
Source: Tata Motors Q2 Results: Profit declines 62% to Rs 477 crore, falls short of expectations