Tata Motors said commodity inflation is running ahead of the price increases it has taken this year, and it expects a further hit of 150-200 basis points to costs in the December quarter.
Strong volumes helped it protect profit growth in the second quarter.
Speaking on the analyst call after its Q2 FY2027 results, Business Operations Officer Girish said commodity inflation "continues to be a major headwind". The year-on-year impact has been almost 540 basis points, including 200 basis points between the first and second quarters.
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Steel, already at a 52-week high with growth of almost 40% year-on-year, and rubber are the biggest drivers, he said.
The company has taken four price increases this year: about 1% in January, 2% in April, 2.5% in July, and 1-2% from October 1, depending on the segment. "It certainly does not cover the commodity increases that we have seen," Girish said.
He said cost reduction remains the first line of action, with pricing kept measured to protect demand. Tata Motors has also asked the government to review the safeguard duty on steel, he said.
The cost pressure showed up in the standalone numbers, which include the Tata Cummins joint operations. Revenue rose 42% to Rs 23,900 crore on wholesales of 135,100 units.
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EBITDA rose 31% to about Rs 2,800 crore, but margin was 11.7%, down 90 basis points year-on-year and flat sequentially. EBIT margin was 9.7%, down 50 basis points.
In the EBIT walk, variable costs were a Rs 1,416 crore headwind, equal to 590 basis points of margin. Volume and mix added Rs 1,159 crore and better net realisation Rs 1,017 crore, together worth 230 basis points. Other costs contributed 280 basis points, which the company attributed to operating leverage on a larger revenue base.
Chief Financial Officer Ramanan said the commodity headwind was almost entirely offset by operating leverage, cost efficiency and improved realisation. Profit before tax before exceptional items rose 51% to Rs 2,700 crore.
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Demand is expected to stay healthy but grow more slowly. Girish said three weeks into October the momentum continued, but third-quarter growth is likely to be high single-digit or the beginning of double-digit, against 21.5% in the same quarter last year.
He named diesel prices and interest rates as key monitorables, noting that a 25 basis point rate increase has already been taken.
Girish said rising top line is helping offset the unprecedented commodity inflation.
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