Tata Motors turns cautious on capex amid West Asia war headwinds

New Delhi: Commercial vehicle market leader is “going a bit cautiously” on its expenditure plan due to the West Asia crisis, which has created multiple headwinds, its MD and CEO Girish Wagh said on Wednesday.

While the company has not revised its capex of around Rs 3,000 crore for FY27, there could be “some timing difference” going ahead, he told reporters in an earnings conference.

Despite headwinds, Wagh said the domestic commercial vehicle industry is expected to grow in the single digit in FY27 as the underlying demand driver still continues to be robust.

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“This war has certainly created the necessity to revisit the playbook because this external event has led to multiple headwinds,” he said when asked if the company has been forced to have a relook at its expansion plans due to the US-Israel war against Iran.

There has been a “serious commodity (price) inflation” due to the war, Wagh said, adding that while the underlying demand still remains pretty robust, “the sentiment is something which is a bit considerate”.

Customers may be thinking twice before purchasing, but since the demand for commercial vehicles is there, they are going ahead with the purchases, he added.

“Because of this uncertainty, we have also looked at our expenditure plan, and we are going a bit cautiously at this moment,” Wagh said, adding that “it would not be wrong to say that we are actively watching some of the important external and macro indicators to ensure that we are able to align our plans immediately, but the Playbook has certainly changed a bit”.

When asked if Tata Motors has revised its capex for FY27, he said, “Whatever capex we had planned for the year, we stay with that. There may be some timing difference as we go ahead”.

He said the company’s capex for a year ranges between 2 and 4 per cent of revenue. For FY27, it is around Rs 3,000 crore.

On the growth outlook for the CV industry, he said, “I think the underlying demand driver still continues to be pretty robust…we are still positive that we would see a single-digit growth for the entire year FY27”.

The boost that the market got after the GST rate cuts in September last year continues, he noted.

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Wagh, however, highlighted that a possible hike in the price of diesel, which accounts for 20-50 per cent of the total cost of ownership for different types of commercial vehicles, along with commodity prices and rainfall, remains a key monitorable, which could have an impact on demand.

When asked about the impact on exports due to the West Asia war, Wagh said markets in West Asia and North Africa have been affected, but the West Asia market is expected to recover fast once the war is over, as there is a requirement for infrastructure.

Also, SAARC markets of Bangladesh, Nepal and Sri Lanka, which had done well last fiscal for the company, are also now facing headwinds. Sri Lanka has taken the maximum hit due to the non-availability of fuel, he added.

Asked about Prime Minister Narendra Modi’s calls for austerity measures in the wake of the West Asia war, Wagh said Tata Motors is fully aligned with it.

“We have, in fact, taken some of the steps right from April to ensure that we are better prepared to address the headwind that we are facing,” he said, adding that the company has already rolled out austerity measures in terms of travelling and pooling.

He further said, “We are also keeping a close control over what we call controllable expenses”.