Tata Motors Sees Little Growth, Record Profit In FY25 Amid Eroding Profitability

Growth at Tata Motors Ltd. was largely muted in the final quarter of 2024-25 amid eroding profitability. Still, on an annual basis, key financial metrics were at a record high.

Consolidated net profit of India's largest automaker by volume fell more than 50% year-on-year to Rs 8,470 crore in the three months ended March 31, 2025, according to an exchange filing on Tuesday. The numbers aren't strictly comparable with the year-ago as those included a one-time tax benefit of Rs 7,093.77 crore. Revenue, meanwhile, rose 0.4% year-on-year to Rs 1,19,502 crore.

Analysts polled by Bloomberg had estimated the topline and bottomline at Rs 1.23 lakh crore and Rs 7,662.3 crore, respectively.

• Revenue up 0.4% at Rs 1.2 lakh crore (Estimate: Rs 1.23 lakh crore)

• Ebitda down 4.1% at Rs 16,644 crore (Estimate: Rs 16,308.1 crore)

• Ebitda margin contracts 60 basis points to 14% (Estimate: 13.3%)

• Net profit down 51.7% at Rs 8,470 crore (Estimate: Rs 7,662.3 crore)

• Final dividend of Rs 6 per share declared

One basis point is one-hundredth of a percentage point.

For the full year, the company clocked a record net profit of Rs 28,100 crore on the back of revenue that increased 1.3% to Rs 4,39,695 crore. The operational profit—measured as earnings before, interest, tax, depreciation and amortisation—stood at Rs 57,600 crore with an EBITDA margin of 13.1%—down 100 bps from a year earlier.

In the process, Tata Motors turned net debt-free with free cash flow of Rs 22,400 crore. Finance costs halved to Rs 2,510 crore due to reduction in gross debt.

“On a consolidated basis, the automotive business is now debt free, reducing the interest costs,” PB Balaji, group chief financial officer at Tata Motors, said in a post-earnings media scrum. “Drawing strength from it, in this environment of heightened uncertainty, we’ll remain agile, proactively drive our growth agenda, reduce our cash breakeven further, whilst continuing to invest in our future.”

“With the shareholders also approving the demerger, we are on track to realise the full potential of each of the businesses.”

The India-UK free trade agreement, which proposes to lower auto tariffs to 10% from more than 100% at present, is directionally on the right track, but Tata Motors is awaiting the fineprint, according to Balaji. That said, Range Rover SUVs—which are already made in India at Chakan near Pune—won’t see a price impact but JLR’s future products will.

“JLR could see some market share gains in India,” Arvind Sharma, director, equity research - India Autos & Transportation at Citi, said in a May 7 note. “While absolute volumes are limited—JLR’s India sales stood at 6,200-odd units in FY25—it could gain some market share from some of the European OEMs like Mercedes-Benz (19,000 units in FY25), BMW (15,800 units in FY25) and Audi (6,000 units in FY25).”

The US-UK trade deal, which reduces auto tariffs to 10% from 27.5% on up to 100,000 cars, is yet another tailwind for JLR—the carmaker had paused US exports in April after US President Donald Trump announced a 25% tariff on all car imports. That was significant, since the US accounts for a fourth of JLR’s volumes and revenue.

“We will continue to engage with the UK government on the details of the trade deal,” Tata Motors said. “Our priority is to ensure we deliver for our global clients and protect margins.” 

To be sure, the immediate business prospects remained hazy due to too many moving parts—tariff wars, trade deals, and a demerger, Balaji said in a post-earnings media scrum. A clearer picture is likely to emerge after the company’s Investor Day on 15 June.

Jaguar Land Rover: At £875 million, the UK-based subsidiary clocked its 10th straight quarter of profitable growth, even as revenue fell 1.7% year-on-year to £7.7 billion. The company has turned net debt-free with a free cash flow of £1.5 billion in FY25. The EBIT margin improved 150 bps to 10.7%—the highest ever.

“Looking ahead, we expect investment spends to remain at £18 billion over a five-year period and will be funded by operational cash flows,” JLR CEO Adrian Mardell said in the statement.

Tata Motors PV: The India car business clocked a profit before tax of Rs 389 crore in Q4 FY25 as against a loss of Rs 144 crore a year-ago. The top line fell 13.1% to Rs 12,543 crore even as EBITDA margin shrunk 60 bps to 7.9%.

The lacklustre performance came on the back of a 5.5% decline in sales to 147,000 units in Q4 FY25, but the Nexon maker managed to retain its VAHAN market share at 13.2% for the full year. And while revenue fell annually due to fewer hatchbacks sold, margins improved by 40 bps due to an improving product mix.

Tata Motors maintained its leadership in the EV space with 55.4% market share, despite heightened competition. Electric cars now make up 11% of overall PV sales, CNG cars account for 25%.

The company now expects to meaningfully grow its car sales due to low base effect, new nameplates and model upgrades. The new Altroz will break cover on 22 May while the Harrier EV is likely in the first quarter of FY26. Those cars will be followed by the Sierra later in the year.

Tata Motors CV: Revenue fell 0.5% year-on-year to Rs 21,500 crore but the EBITDA margin improved by 20 bps to 12.5% in Q4 FY26, according to the company statement. Sales fell 4.8% to 99,600 units for a VAHAN market share of 37.1%.

For the full year, revenue fell 4.7% to Rs 75,053 crore but EBITDA margin improved 100 bps to 11.8%, as the product mix and realisations optimised. The business delivered its highest ever profit of Rs 6,600 crore and 37.7% return on capital employed.

On Tuesday, Tata Motors shares fell 1.76% to Rs 707.90 apiece on the BSE even as the benchmark Sensex ended the day 1.55% lower at 81,148.22 points. The quarterly results were declared after market hours.