New Delhi: Tata Motors Ltd is looking to build on sales momentum in the second half of the financial year after profit from its core commercial vehicle business more than doubled in the September quarter.
The country’s largest commercial vehicle maker swung into a consolidated loss of ₹867 crore in the July-September period from a profit of ₹498 crore a year earlier as it recorded a loss of ₹2,027 crore, according to its exchange filing. The loss was driven by a decline in the valuation of its investments in Tata Capital Ltd. Shares of Tata Motors' group peer have fallen 2% since listing in October.
Adjusting for the Tata Capital investment, net profit came at ₹1,159 crore, more than double of ₹498 crore the company recorded a year earlier.
This was the first quarter that Tata Motors, which now houses the Tata Group’s commercial vehicles business, started reporting financials independently after completing its demerger from the passenger vehicle unit.
Revenue during the quarter rose 6% year-on-year to ₹18,757 crore.
Earnings before interest, tax, depreciation and amortization or Ebitda margin came at 11.4%, a 140 basis point improvement, led by efforts to boost volumes. Ebitda is a measure of operating income.
Earnings of other commercial vehicle majors
The earnings of commercial vehicle majors, including Tata Motors and its rivals Ashok Leyland Ltd and Mahindra and Mahindra Ltd, are considered a proxy indicator of economic growth in the country.
Ashok Leyland reported a 7% year-on-year (y-o-y) growth in profit after tax to ₹820 crore, while revenue rose 13% to ₹12,577 crore in the July to September quarter.
Mahindra and Mahindra doesn’t report financials of its commercial vehicle segment separately, but noted during its earnings conference on 4 November that it expects good growth in the commercial vehicle segment. Sales of its commercial three-wheelers and four-wheelers increased 37% year-on-year to 38,684 units in the July to September period.
Commentary from the Tata Motors management suggests a growth momentum in economic spending, and the benefits of tax cuts are expected to sustain in the second half of the financial year 2025-26.
“We are yet to see the full benefit of GST as it passes on to consumers,” said Girish Wagh, managing director and chief executive at Tata Motors Ltd, during a post-earnings press meeting. The second half is expected to be better than the first six months, which saw some consumers delaying purchasing decisions owing to the announcement of GST rate cuts, he said..
The company turned free cash flow positive during the quarter at ₹2,000 crore from negative cash of ₹2,000 crore during the first quarter ended June.
The net cash on the company’s balance sheet was at ₹1,200 crore as of September.
During the quarter, Tata Motors' wholesales rose 12% over the previous year to 97,000 units. This was led by 11% growth in the sales of small commercial vehicles to 31,400 sales. In the heavy commercial vehicle segment, 24,000 units were sold, growing 5% year-on-year. The medium CV sales rose 14% to 16,800 units.
“We anticipate a strong second half for FY26. Construction, infrastructure, and mining activities will gain momentum, further fueling demand for trucks and tippers,” said the company’s statement.
For Iveco, which it acquired for $4.4 billion, Wagh said that the company is working on completing all the necessary regulatory approvals for the acquisition before unveiling any plans for integration and the growth path ahead.
The combined Tata Motors-Iveco entity is expected to sell over 540,000 units annually and generate more than $25 billion in revenue.
For now, Wagh and the company are hoping that the domestic sales momentum picks up in the medium and heavy commercial duty segment to aid revenue and profits in the next two quarters.
“Infrastructure spending growth typically leads to growth in sales of medium and heavy commercial vehicles, so the growth should be higher in the coming quarters,” Wagh told reporters during the post-earnings call.
Shares of Tata Motors settled 2.84% lower during Thursday’s trading hours as against 0.37% decline in Nifty Auto during the day.
The shares of the commercial vehicle company, which will also house recently acquired Italian truck and bus maker Iveco, closed at a 27% premium to the discovered price at ₹330 each on the NSE on Wednesday. Tata Motors’ share listed at ₹335, a 28% premium to its discovered price of ₹260.75.