Tata Motors has released its Q3 consolidated financial results, presenting a mixed performance with strong revenue growth offset by a significant decline in profitability. The Indian automotive giant demonstrated robust top-line expansion while facing challenges in maintaining profit margins during the quarter.

Financial Performance Overview

The company's financial metrics for Q3 show contrasting trends across revenue and profitability parameters:

Revenue Growth Momentum

Tata Motors achieved substantial revenue growth of 16.11% year-on-year, with consolidated revenue reaching ₹218.5 billion in Q3 compared to ₹188.2 billion in the same quarter of the previous year. This represents an increase of ₹30.3 billion, indicating strong business momentum and market demand across the company's automotive portfolio.

Profitability Challenges

Despite the positive revenue trajectory, the company faced significant pressure on profitability during the quarter. Consolidated net profit declined by 48.16% to ₹7.05 billion from ₹13.6 billion recorded in Q3 of the previous year. This represents a decrease of ₹6.55 billion in absolute terms, highlighting operational challenges or increased costs during the reporting period.

Performance Analysis

The divergent trends between revenue growth and profit decline suggest potential margin compression during Q3. While the company successfully expanded its top-line performance with double-digit revenue growth, the substantial reduction in net profit indicates possible increases in operational costs, raw material expenses, or other factors impacting overall profitability margins.

Tata Motors Limited has announced board approval for a comprehensive merger plan involving two of its wholly owned subsidiaries, marking a significant step toward corporate structure simplification. The board of directors approved the Composite Scheme of Amalgamation on January 29, 2026, following recommendations from the Audit Committee.

Merger Details and Structure

The approved scheme involves the amalgamation of TMF Holdings Limited and TMF Business Services Limited with Tata Motors Limited under Sections 230 to 232 of the Companies Act, 2013. The merger will consolidate these entities into a single corporate structure, with both subsidiaries being dissolved without winding up proceedings.

*As per audited standalone financial statements for the year ended March 31, 2025

Business Operations of Merging Entities

The three companies operate in distinct but complementary business areas. Tata Motors Limited focuses on manufacturing commercial vehicles, while TMF Holdings Limited operates as an NBFC – Core Investment Company registered with the Reserve Bank of India, engaged in investing, granting loans, guarantees and other forms of finance to subsidiaries and group companies. TMF Business Services Limited specializes in operating leases business.

Strategic Rationale and Benefits

The proposed amalgamation is designed to deliver multiple operational and financial advantages:

• Structure Rationalization: Reducing the number of legal entities to decrease structural complexity and enable more efficient management
• Cost Optimization: Eliminating administrative duplications and reducing associated costs of maintaining separate entities
• Operational Efficiency: Streamlining business operations under a unified corporate structure

Financial and Regulatory Framework

The merger will proceed without any cash consideration or share exchange. The entire paid-up share capital of both subsidiaries will be cancelled, and no new equity shares will be issued by Tata Motors. The company's shareholding pattern will remain unchanged following the scheme's implementation.

Regarding regulatory compliance, the transaction falls under related party arrangements since both entities are wholly owned subsidiaries. However, the merger is exempt from certain regulatory requirements under the MCA Circular dated July 17, 2014, and SEBI Listing Regulations 23(5)(b).

Approval Process and Timeline

The scheme requires comprehensive regulatory clearances including approvals from shareholders, creditors, the National Company Law Tribunal, BSE Limited, National Stock Exchange of India Limited, and other statutory authorities. The implementation will proceed under the Companies Act, 2013, Income-tax Act, 1961, and other applicable laws.

Under SEBI regulations, the requirement for "No Objection Letter" from stock exchanges is not applicable for schemes involving merger of wholly owned subsidiaries with holding companies. However, Tata Motors and TMF Holdings Limited will file the scheme with stock exchanges for regulatory compliance and public dissemination.