Tata Motors’ commercial vehicles business on Thursday reported a mixed set of numbers for the October- December quarter, with strong operating performance offset by sizeable exceptional charges that dragged reported profit below market expectations.
Net profit stood at Rs 705 crore, sharply lower than Bloomberg’s estimate of Rs 1,896 crore and down 48% year-on-year from Rs 1,355 crore. The decline came despite a strong improvement in operating metrics, as the company booked exceptional items worth about Rs 1,500,1,600 crore during the quarter.
Revenue rose 16.1% year-on-year to Rs 21,847 crore, marginally higher than Bloomberg’s estimate of Rs 21,757 crore. On a sequential basis, revenue grew 17.6%, supported by higher vehicle volumes, improved realisations and a recovery in demand across key commercial vehicle segments.
Robust Operating Performance
Ebitda increased 41.8% year-on-year to Rs 2,883 crore, beating Bloomberg’s estimate of Rs 2,767 crore. Operating margins expanded on the back of operating leverage, a richer product mix and better cost control, even as input costs remained elevated. The company reported double-digit Ebitda margins for the tenth consecutive quarter.
However, reported profitability was weighed down by exceptional charges. The largest impact came from a Rs 603-crore provision linked to the implementation of the new labour codes, reflecting changes in employee benefit obligations.
In addition, Tata Motors booked an exceptional charge of Rs 962 crore related to a group restructuring exercise involving the merger of TMF Holdings and TMF Business Services with the parent company. A further Rs 82 crore was recorded towards acquisition-related expenses.
Excluding exceptional items, profit before tax rose 36% year-on-year to Rs 2,290 crore.
Volume growth remained healthy during the quarter. Total commercial vehicle sales rose 20% year-on-year, led by an 18% increase in domestic volumes and a sharp rise in exports. The company also gained market share in the domestic CV segment, aided by strong demand from infrastructure-linked sectors and the rollout of new products.
Strong Cash Generation
Cash generation continued to improve. Free cash flow for the quarter stood at Rs 4,752 crore, supported by higher profitability and tighter working capital management. Tata Motors ended the quarter with a net cash position of Rs 3,900 crore in its domestic commercial vehicles business and Rs 6,100 crore at the consolidated level.
Commenting on the performance, MD and CEO Girish Wagh said the company delivered another strong quarter driven by disciplined execution and improving demand conditions.
“Our recent launches under the ‘Better Always’ philosophy are setting new benchmarks in safety, total cost of ownership and emission-free mobility. With infrastructure spending accelerating, we are well positioned to sustain momentum and drive continued growth,” he said.
The company said demand is expected to remain stable in the March quarter, supported by government-led infrastructure spending and a gradual recovery in freight activity.