Summary
Tata Motors Limited - Q3 FY26 Earnings Call Summary Thursday, January 29, 2026, 5:00 PM IST
Event Participants
Executives 2 Girish Wagh (MD & CEO), G.V. Ramanan (CFO)
Analysts 7 Amey (Unspecified), Amyn Pirani (Unspecified), Gunjan (Bank of America), Jeehan (Unspecified), Jinesh (Unspecified), Kapil (Unspecified), Pramod Amte (Unspecified), Raghu (Nuvama)
Financials & KPIs
| Metric | Reported | Commentary |
|---|---|---|
| Revenue (Consolidated) | ₹21,800 crores | +17% YoY, driven primarily by higher volumes and realization. |
| Revenue (Standalone) | ₹21,533 crores | +17% YoY, reflecting strong domestic recovery across HCV and ILMCV. |
| EBITDA Margin (Consolidated) | 12.5% | 10th consecutive quarter of double-digit delivery. |
| EBIT Margin (CV Segment) | 10.6% | First-time milestone of double-digit EBIT margin; +100 bps YoY. |
| PBT (Before Exceptional Items) | ₹2,300 crores | +₹600 crores YoY; impacted by precious metal volatility and wage inflation. |
| Free Cash Flow (Q3) | ₹4,800 crores | Outperformed Q3 FY25 due to working capital reversal and production levels. |
| Net Cash | ₹3,900 crores | Standalone net cash position (Consolidated at ₹6,100 crores) providing growth momentum. |
| ROCE | 53% | Robust trajectory supported by higher profitability and disciplined capital spend. |
| Wholesale Volume | 116.8K units | +20% YoY; HCV (+23%), ILMCV (+26%), and SCV (+15%) saw double-digit growth. |
Geographic & Segment Commentary
- Heavy Commercial Vehicles (HCV): Grew 23% YoY, driven by infrastructure projects and the launch of higher payload/fuel-efficient rigid trucks. Segment benefited from increased fleet utilization (80%) and firming freight rates (2-5% growth).
- ILMCV & SCV: ILMCV grew 26% YoY, supported by the new Azura platform and e-commerce demand. Small Commercial Vehicles (SCV) saw 15% growth, with the Ace Gold Diesel (Lean NOx Trap tech) and Ace Pro driving the highest retail volumes since Q1 FY24.
- International Business: Reported 70% YoY shipment growth led by SAARC (Sri Lanka recovery) and expansion in Middle East/North Africa. Management noted a better-balanced market mix compared to the FY17 peak.
- Buses & Vans: CV Passenger grew 4% YoY; secured 6,000 unit orders from various State Road Transport Corporations (STUs). Management is targeting higher single-digit growth for the next year, utilizing increased bodybuilding capacity (+15%).
Company-Specific & Strategic Commentary
- Electric Transition: Launched 17 new trucks, including 7-ton to 55-ton electric models built on the “Intelligent Modular Electric Vehicle” architecture. Includes in-house battery management and e-axles.
- Iveco Acquisition: Progressing toward finalization by Q1 FY27; regulatory approvals expected by March 2026. Management noted potential cross-selling and sourcing benefits from the EU FTA.
- Digital Subscription: Doubled Fleet Edge subscription renewals through new “Lite” and “Prime” plans, with 1 million installations currently providing fleet utilization data.
- GST 2.0 Impact: Rationalization of GST rates has prompted fleet operators to initiate delayed vehicle replacements; however, some large operators are still assessing input tax credit procedures.
Guidance & Outlook
| Metric | Guidance / Outlook | Commentary |
|---|---|---|
| Volume Growth | Growth momentum to continue in Q4 FY26 | Driven by base effect and infrastructure activity; H1 FY27 also expected to be strong. |
| CapEx | Within existing guidance | Disciplined spending while maintaining focus on new technology and EV transitions. |
| Bus Business | High single-digit growth (FY27) | Expected cyclical demand in Q1/Q4 and delivery of large STU tender wins. |
| FCF | Sustain FCF accretive status | Management aims to meet FY26 cash flow guidance through working capital management. |
Risks & Constraints
| Risk | Context |
|---|---|
| Commodity Inflation | Precious Group Metals (PGM) and copper volatility caused a 50 bps hit in Q3. A 1% price hike was taken in Jan 2026 to mitigate ongoing headwinds. |
| Supply Chain Stress | Sudden demand surges have hit capacity bottlenecks in castings. Management is initiating de-bottlenecking but monitors stress across the auto ecosystem. |
| Exceptional Items | ₹1,600 Cr impact in Q3 due to New Labor Code (₹603 Cr), demerger costs (₹960 Cr), and IVECO acquisition costs. |
Q&A Highlights
Margins and Pricing
- Question: What is the impact of commodity inflation and are price hikes planned? (Gunjan, BofA)
- Answer: PGM and copper were the main headwinds, causing a 50 bps hit. A 1% price hike was implemented across the range on Jan 1st to offset this. (Girish Wagh)
EV Bus Strategy
- Question: How many units were won in the 10,900 E-bus tender and why the cautious approach? (Jinesh)
- Answer: TML was not L1; the company prioritizes payment security, asset-light models via consortiums, and financial prudence over volume. (Girish Wagh)
Replacement Demand
- Question: Are you seeing a shift from used to primary markets? (Gunjan, BofA)
- Answer: Replacement demand is gaining momentum post-GST 2.0 as lower initial prices make EMIs more viable. Large operators are still streamlining tax processes, which should accelerate demand in FY27. (Girish Wagh)
Financing & Delinquencies
- Question: Is there ease of finance and what are the delinquency trends? (Raghu, Nuvama)
- Answer: Delinquency trends have stabilized and are improving. Stronger collections and tighter underwriting are visible; 25% growth is impossible without financier support. (Girish Wagh)
Key Takeaway
Tata Motors delivered a robust Q3 FY26, characterized by its 10th consecutive quarter of double-digit EBITDA and a milestone 10.6% EBIT margin in the CV segment. Domestic wholesale volumes rose 20% YoY, propelled by a 23% jump in HCVs and strong traction in the newly launched Azura ILMCV platform. Despite a ₹1,600 crore impact from exceptional items (labor codes and demerger costs), the company generated a strong ₹4,800 crore FCF, turning net cash positive at ₹3,900 crore (standalone). Strategically, the company is accelerating its zero-emission roadmap with new modular electric truck launches and the pending Iveco acquisition. Management remains optimistic for Q4 FY26 and H1 FY27, citing infrastructure tailwinds and a 1% price hike to counter PGM and copper volatility. The focus remains on “profitable growth” through a basket of metrics rather than market share alone.
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