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Mint
3 days ago
- Automotive
- Mint
From red to black: India's top automakers see EV business turning around
New Delhi: After pumping in money for several years, Indian automotive manufacturing companies are finally beginning to see their electric vehicle (EV) businesses moving towards profitability. The EV business of top car makers Tata Motors and Mahindra and Mahindra (M&M) are already operationally profitable–a crucial milestone towards full profitability–even as Hyundai Motor India said its flagship EV is per-unit profitable. These three companies account for nearly two-thirds of the electric car market. On the other hand, two-wheeler majors Bajaj Auto Ltd, Hero MotoCorp, Ather Energy and Ola Electric Ltd are hopeful of turning operationally profitable soon. Achieving net profit, however, is some distance away for both segments. The trend comes on the back of strong growth in sales of EVs in FY25. Even as electric passenger vehicle sales rose 18% to 107,645 units in the fiscal year, electric two-wheeler sales grew 21% to 1.14 million units in the same period, as per Vahan portal data. Also read | New Delhi is promoting hybrid cars on par with electric, upsetting EV makers Analysts said policy incentives and a reduction in the cost of EV production are helping their profitability push. 'Reduction in import duties on key materials required to build EV components, increased localization by OEMs, and policy interventions like PLI and PM e-drive scheme are helping OEMs move towards EV profitability," Shridhar Kallani, research analyst for auto at Axis Securities, said. 'The increasing demand from consumers is also leading to a volume push, thereby helping the OEMs to grow the market and their profitability." Operations profitable Tata Motors, India's third largest automaker, reported Ebitda (earnings before interest taxes depreciation and amortization) margin of 1.2% in FY25, a move into the black from -7.1% in FY24. 'In the EV segment, we became one of the few global manufacturers to achieve positive Ebitda (earnings before interest taxes depreciation and amortization) on the back of a higher level of localisation, aggressive cost reduction, and securing PLI benefits," Shailesh Chandra, managing director at Tata Motors Passenger Vehicles Limited and Tata Passenger Electric Mobility Limited, said in his annual letter to shareholders. Likewise, close rival M&M reported Ebitda-positive EV sales, despite entering the segment late. And Hyundai reported positive Ebitda on its flagship Creta Electric at the unit level, minus launch-related expenses. M&M launched two EVs in the January-March period–BE 6 & XEV 9e–while Hyundai launched the Creta Electric in January. These new launches are driving the EV sales of the two companies, which were at 8,182 units and 2,410 units, respectively, during FY25, per data from the Federation of Automobile Dealers Associations (Fada). Read this | EVs hit with falling resale value as consumer demand cools 'MEAL (Mahindra Electric Automobile Ltd) as a company was Ebitda positive in its first quarter of operation," Rajesh Jejurikar, executive director and CEO-auto and farm sectors, said during the post Q4 results earnings call on 5 May. 'It made a ₹10-crore Ebitda profit without accruing any PLI (production-linked incentive)." Meanwhile, K.S. Hariharan, head of investor relations at Hyundai Motor India, said during the company earnings call on 16 May, 'If you exclude the launch-related marketing expenses and the test drive discounts, we are margin positive on Creta EV." However, there is some scepticism about them matching profits of conventional internal combustion engine (ICE) vehicles anytime soon. Rahul Bharti, senior executive officer, corporate affairs at India's top conventional car maker Maruti Suzuki, said during the company's Q3 earnings call on 29 January that it will take a long time for EVs to match ICE's profitability. 'If the profit of an EV was equal to that of an ICE, why would the government support so much at the Centre and the state level?" Bharti noted during the call with analysts. 'The very fact that there is a drastic reduction in GST, and so many subsidies at different levels on demand side and supply side, means that there is a difference." Profit on two-wheels India's top two wheeler players, too, are also chalking out a clear path to profitability. Bajaj Auto Ltd and Hero MotoCorp Ltd expect to turn their EV business Ebitda profitable in the next 24 months. Meanwhile, Ather Energy and Ola Electric Ltd remain hopeful that they will soon touch the break even point. Ola Electric Mobility Ltd, the country's largest electric two-wheeler company, said it is very close to breaking even. Ola had guided for reaching the milestone in the current quarter, but it's now likely to reach it in the July to September period amid slowing sales. 'What we had shared is that we expect to get to auto segment Ebitda positive within some time in Q1…we are more or less on track on that," Bhavish Aggarwal, founder and managing director at Ola Electric, said, adding that its auto segment will likely turn Ebitda positive sometime in June or July. The Ebitda margin was -78.6% in Q4 of FY25. As per the management, Ola will need 25,000 monthly sales to reach the breakeven point. In five months of 2025 so far, it has sold on average 19,000 vehicles per month, as per Vahan portal data. Also read | EV industry, government struggle to find alternatives as China throttles rare earth magnet supply Its Bengaluru-based peer Ather Energy Ltd is also confident about its path to profitability as its Ebitda margin improved to -23% in FY25 from -42% in the year-ago period. 'Profitability is the function of revenue and cost," Ravneet Phokela, chief business officer at Ather, told Mint. 'As we increase our sales through network expansion and reduce cost through localisation, there is a clear path to profitability." The country's largest conventional two-wheeler seller, Hero MotoCorp, is also guiding for profitability of its EV business by 2027 on the back of increasing sales, reducing cost and realising PLI benefits. 'What will really make this business profitable is the scale-up (of EV business), the bill of material cost reduction through localization, and PLI benefit realization," Vivek Anand, the company's chief financial officer said during the post results earnings call on 14 May. Hero MotoCorp's Ebitda margin from EVs improved from -155% in FY24 to -95% in FY25. 'At 25,000-30,000 levels of volume per month, we hope that this will break even, which in our view is a couple of years away," Anand added. The company sold about 4,000 vehicles on average every month in the financial year 2025. And read | Automakers rush to PMO, commerce ministry as Chinese magnet crisis set to spread beyond EVs, threatens production cuts Bajaj Auto Ltd also noted during its call with analysts that it is very close to breaking even for its e-two-wheeler business. For its combined two-wheeler and three-wheeler electric business, it had broken even on the Ebitda level in the July-September quarter (Q2 of FY25). 'At a unit economics level, clearly with PLI and PLI-certified models, we now have a line of sight to getting very close to an Ebitda break-even, relative to what was a very significant loss 12-15 months ago," said Dinesh Thapar, CFO at Bajaj Auto. The Nifty Auto index has gained 0.8% in 2025, lagging the Nifty 50's 4.2% rise during the same period.
Mint
19-05-2025
- Automotive
- Mint
Maruti, Hero among automakers boosting earnings with exports as domestic demand remains on shaky ground
New Delhi: Exports of cars, scooters and motorcycles helped the country's top automakers post growth in their earnings in FY25 and beat domestic market blues caused by weak consumer sentiment. Maruti Suzuki India Ltd, the country's largest carmaker, and Hero MotoCorp Ltd, the biggest two-wheeler company, relied on export growth of 17% and 43%, respectively, to post a surge in profit and revenue during the year. Both companies recorded their slowest growth in domestic sales since FY22. Maruti Suzuki's sales grew 3% to 1.9 million vehicles, while Hero MotoCorp's sales increased by 5% to 5.9 million during the previous fiscal. TVS Motor Company Ltd, Mahindra & Mahindra Ltd and Eicher Motors Ltd were among the companies that recorded a surge in exports, although their domestic sales growth remained decent. TVS Motor's exports grew 18% to 1.2 million two-wheelers. Mahindra's overseas shipments grew 41% to 34,709 vehicles, while Eicher Motors' Royal Enfield exports grew by 30% to 100,136 motorcycles. Data from the Society of Indian Automobile Manufacturers indicated that domestic passenger vehicle sales grew 2% to 4.3 million, but exports surged by 15% to 770,364 units. Two-wheeler sales in the domestic market grew by 8% to 24.6 million units while exports grew by 19% to 5.2 million units. Analysts said the growing share of exports in the portfolio of auto companies is helping them in expanding margins, thus increasing profitability. Also Read | In charts: How second-hand car sales are picking up in India 'International sales are generally more profitable for Indian auto companies, and that's one of the reasons earnings have seen a boost in FY25," said Shridhar Kallani, an auto research analyst at Axis Securities. 'Exports typically fetch better margins because they offer higher selling prices, benefit from a favourable exchange rate, and involve lower discounting compared to the intensely competitive domestic market." Growth booster For Maruti Suzuki, exports are increasingly emerging as a driver of growth. 'We are growing better because exports have been very buoyant. In the coming year, exports are expected to grow by 20%. This is going to be the main driver for our production, sales, and profits," RC Bhargava, chairman of Maruti Suzuki, said during a post-results media briefing on 25 April. After a 3% growth in domestic car sales, the New Delhi-based company posted a 7.5% increase in profit to ₹14,500 crore in FY25. Encouraged by the strong growth in the overseas market, Maruti plans to export the majority of the 70,000 electric cars it will produce this fiscal. Hero MotoCorp reported a 5% rise in domestic sales of motorcycles and scooters, but exports grew 44%, albeit on a lower base, which helped the company post a 16% jump in profit to ₹4,610 crore. Company executives noted during the earnings call on 14 May that sales growth in the overseas market is expected to increase in the current financial year as it chalks an expansion plan. Also Read | Prediction: Maruti stock will beat the market. Here's why. Hero will enter the European and the UK market during the second half of this financial year. Its new electric Vida Z model to be launched in July will be sold in Europe and the UK. Hyundai Motor India, the South Korean subsidiary of auto giant Hyundai, is also relying on exports to help it beat the domestic market blues. It is targeting a 7-8% growth in exports in the current financial year. Hyundai India's sales in the domestic market declined by 3% during the year. 'We will grow in line with the industry within the country. The focus will be on exports growth to offset domestic market challenges," said Tarun Garg, chief operating officer at Hyundai Motor India. Positive outlook The major markets abroad for Indian auto companies include Southeast Asia, Latin America and Africa. Also Read | Hero MotoCorp needs 125cc to stay in the fast lane While macro challenges like weak Africa recovery and volatility in Sri Lanka and Bangladesh exist, most manufacturers expect FY26 to be strong, said Sanket Kelaskar, an institutional equity analyst at Ashika Group. 'There are structural scale-up targets of the companies. A ramp-up in earlier entry markets will help. Despite some near-term risks, the medium-term export outlook remains positive," Kelaskar said.
