Tata Motors beats Q1 profit estimates fueled by strong luxury car sales

Tata Motors Q1 profit 2024: Tata Motors has reported a significant increase in first-quarter profits, surpassing analyst expectations due to robust sales in its luxury Jaguar Land Rover (JLR) division.

For the three months ending June 30, Tata Motors' consolidated net profit surged 73.8 per cent year-on-year to Rs 5,566 crore, exceeding the forecasted Rs 5,425 crore, according to LSEG data.

JLR, Tata Motors’ luxury division, remains a crucial revenue driver for the company, contributing about two-thirds of its total revenue. The luxury segment, which includes high-margin models such as the Range Rover, Range Rover Sport, and Defender, saw its contribution to JLR's total wholesale volumes rise to 68 per cent in the June quarter, up from 57.6 per cent in the previous year. This increase reflects growing consumer preference for premium models despite global economic uncertainties. The division's success is attributed to effective marketing strategies and enhanced vehicle features appealing to affluent buyers.

Despite the profit boost, JLR experienced its slowest wholesale volume growth in two years, with a 5 per cent increase in the quarter, due to weakened demand in its key European markets. The company has maintained its full-year forecast of an 8.5 per cent margin on earnings before interest and taxes (EBIT) for JLR.

Tata Motors' overall revenue grew by 5.7 per cent to Rs 1.08 lakh crore, marking its fifth consecutive quarter of slowing revenue growth. Domestic car wholesales in India fell to a two-year low during the April-June period, impacted by the general elections and extreme heat, with the company’s total domestic sales volume increasing by only 2 per cent—its slowest growth in three quarters.

This subdued performance contrasts with the upbeat results from competitors like Maruti Suzuki and Mahindra & Mahindra, highlighting the challenging market conditions in India. Additionally, Tata Motors is focusing on enhancing its production efficiency and expanding its vehicle lineup to counteract the domestic market slowdown and capitalise on international opportunities.

The shares of Tata Motors ended 1.21 per cent lower at Rs 1,142.65 apiece on the National Stock Exchange on Thursday, August 1, 2024.