Tata Motors: Mixed Q3 Signals
- 30th January 2025
Aaj Ka Bazaar
The US market mainly moved lower on Wednesday, partly offsetting the notable rebound seen in the previous session. The lower close on Wall Street came after the Federal Reserve announced its widely expected decision to leave interest rates unchanged following its first monetary policy meeting of 2025. The decision to leave rates unchanged came as the Fed noted inflation remains somewhat elevated and reiterated its strong commitment to returning inflation to its 2% objective. Asian markets were mixed in thin holiday trade this morning as investors waited for clarity on the Trump administration’s plans for trade policy. Indian shares look set to open on a muted Thursday as investors react to a hawkish Fed policy statement and a mixed set of earnings results from Tata Motors and Bajaj Finance. Investors also await cues from next week’s MPC meeting. Following recent measures to address tight liquidity conditions in the banking system, economists expect the Reserve Bank of India to commence the rate easing cycle with a 25-basis point rate cut in the February 7 policy meeting.
Markets Around Us
BSE Sensex –76,820.98 (0.36%)
Nifty 50 – 22,026.00 (0.30%)
Bank Nifty – 48,941.10 (0.15%)
Dow Jones – 44,857.32 (0.32%)
Nasdaq – 19,630.73 (-0.52%)
FTSE – 8,557.81 (0.28%)
Nikkei 225 – 39,425.04 (-0.02%)
Sector: Automobile
Tata Motors Ltd. Q3FY25 Outlook
Tata Motors experienced a tepid quarter during the fiscal, falling short on expectations on all fronts. Despite this, there’s a silver lining with gradual recovery in financial performance on a sequential basis. The top-line growth was largely supported by the robust contribution of JLR, which had shown sluggishness in the previous quarter. Improved wholesale demand post the supply disruption was the key driver for improved revenues, further bolstered by accretive margins for the segment due to an improved mix and lower D&A (Depreciation & Amortization). However, the commercial vehicle (CV) and passenger vehicle (PV) segments partially offset these gains, led by lower volumes and an unfavorable product mix. The overall profitability was hindered by a rise in the raw material (RM) basket, increased inventory costs, and miscellaneous expenses. On the brighter side, margins across segments showed a positive recovery on a sequential basis, reflecting the company’s effective cost control measures.
Why it Matters:
Tata Motors. Key uncertainties related to demand in the US and China warrant close monitoring. Additionally, management’s commentary on the global demand scenario for JLR will be crucial for future performance.
NIFTY 50 GAINERS
BAJFINANCE – 7995.85 (3.04%)
INFY – 1840.10 (2.78%)
HINDALCO – 599.85 (2.70%)
NIFTY 50 LOSERS
TATAMOTORS – 701.05 (-6.84%)
INFY – 1866.90 (-0.76%)
ITCHOTLES – 171.30 (-0.32%)
Sector: NBFC
Bajaj Finance Ltd. Q3FY25 Result
India’s leading NBFC, Bajaj Finance, showed strong performance in Q3FY25, marked by significant growth in assets under management and an 18% YoY increase in net profit, surpassing estimates. The company experienced a highest number of new loan bookings and a steady customer acquisitions during the quarter. Bajaj Finance holds a 7% overall market share and a dominant 37% share in the NBFC personal loans segment. However, in Q3FY25, there was some deterioration in asset quality and an increase in provisions. The industry is currently navigating a credit cycle with rising credit costs, although Bajaj Finance’s credit cost is expected to stabilize in the near term. The company has ended co-branded partnerships with RBL Bank and DBS Bank, and management commentary on these will be closely monitored.
Why it Matters:
Strategic partnership with Airtel and its transformation into a Finance + AI (FINAI) company, by integrating AI-driven processes across operations, are expected to enhance performance. AUM growth remains strong, and return ratios are within management’s guidance. Overall, Bajaj Finance delivered strong performance with expectations for improved profitability and asset quality in the upcoming quarters.
Around the World
Asian stock markets remained mostly stable on Thursday as investors reacted to the U.S. Federal Reserve’s decision to keep interest rates unchanged with a cautious outlook. Tech stocks stayed under pressure due to mixed signals on artificial intelligence. Meanwhile, Australian markets outperformed, reaching record highs on expectations of a rate cut by the Reserve Bank of Australia in February. Concerns over potential U.S. trade tariffs under Trump’s policies added uncertainty. Trading volumes were low due to Lunar New Year holidays in major Asian markets like China, Hong Kong, and South Korea. Japan’s stock indexes stayed flat as tech losses balanced gains in domestic sectors, with SoftBank declining further after reports of a $25 billion investment in OpenAI. Australian stocks gained on rate cut bets, though core inflation remains high. India’s Nifty 50 was set for a slight positive open, while Philippine markets dipped after weak GDP data.
Option Traders Corner
Max Pain
Nifty 50 – 23,200
Bank Nifty – 49,300
Nifty 50 – 23,107 (Pivot)
Support – 23,031, 22,900, 22,825
Resistance – 23,238, 23,314, 23,445
Bank Nifty – 49,071 (Pivot)
Support – 48,943, 48,721, 48,594
Resistance – 49,293, 49,421, 49,643
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