Tata Motors Q3 Results Review — Sharp Stock Correction Yet To Make Risk Reward Favorable, Says Yes Securities

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Yes Securities Report

Tata Motors Ltd.’s Q3 FY25 consolidated results were operationally mixed led by higher-than expected VME at JLR at 4.2% in Q3 FY25 (versus 1.7% YoY, 3.2% in Q1 FY25 and ~4% in Q2 FY25), dragged its Ebitda margins at 14.2% (-200 bp YoY, estimate 15%). This was partially offset by better S/A margins (including PLI) at 13.4% (estimate 13%).

On the positive side, deleveraging is on track with net auto debt declined to ~Rs 193 billion in 9MFY25 (versus Rs 220 billion in H1 FY25, Rs 160 billion in FY24 and Rs 437 billion in FY23).

While management sounded confident of further volume recovery in Q4 (seasonally strong quarter) and have maintained JLR Ebit guidance of 8.5% (vs ~7.7% in 9M), implying +10% Ebitm in Q4 FY25. This we believe is challenging as its largely hinges on volumes given key margins drivers such as-

1. peak LR contribution,

2. raw material tailwinds and

3. controlled VME is now moderating QoQ given demand challenges cropping up in key markets like Europe, UK and China while the US is still strong.

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