Tata Motors Q2 consolidated net loss narrows to Rs. 944.6 crore

Tata Motors Limited on November 9 reported a consolidated net loss of Rs 944.61crore for the quarter ended September (Q2FY23). The homegrown multinational automotive manufacturing firm had posted a net loss of Rs. 4,441.57 crore in the year-ago period (Q2FY22).

The Mumbai-based company's consolidated revenue from operations rose 29.7 percent on a year-on-year basis to Rs 79,611.3 crore for the reported quarter as against Rs 61,378.82 crore from the year-ago period.

Earnings before Interest, Tax, Depreciation and Amortisation (EBITDA) margin, a metric of corporate profit, improved by 130 basis points (bps) YoY in Q2FY23 to 9.7%.

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Domestic business

The Indian automaker's domestic commercial vehicles business registered a 19% growth in sales over Q2 FY22 led by led by stronger sales of medium and heavy commercial vehicles (MHCVs) and a robust recovery in passenger carrier demand.

Tata’s passenger vehicle (PV) business continued its strong momentum with wholesales at 142,755 vehicles (+69% YearonYear and 10% QuarteronQuarter), amid strong festive demand and debottlenecking actions.

"Demand continues to remain strong, however, will remain a key monitorable in wake of global uncertainties. Improving chip supply and cooling commodity prices will aid revenue and margins recovery and hence aim to deliver strong improvements in EBIT (earnings before interest and tax) and free cash flows in H2 FY23," Tata Motors stated in a filing to the BSE.

JLR

Tata Motors's Jaguar Led Rover (JLR)revenue was £5.3 billion during Q2FY23, which is up 36% YoY from Q2FY22 reflecting strong model mix and pricing with wholesale volumes (excluding China JV) of 75,307 up 17.6% YoY and 4.9% on the prior quarter, the company stated in a filing to BSE.

Tata Motors claimed that JLR is continuing to focus on signing long-term partnership agreements with chip suppliers which is improving visibility of future chip supply.

Production and sales volumes are expected to improve with positive profit margins and cashflow expected in the second half of FY23 and free cashflow is expected to be near breakeven for the full financial year, as per the company's claims.

Loss again?

Thierry Bolloré, Jaguar Land Rover’s Chief Executive Officer, said: “We delivered a stronger financial performance in the second quarter as production of our new Range Rover and Range Rover Sport ramped up, improving revenue, margins and cash flow, despite continuing semiconductor constraints."

Some analysts expected the company to register a healthy topline growth, some were skeptical on its bottomline. While some anticipate a sharp fall in net losses quarter-on-quarter (QoQ), a few of them anticipated a marginal rise in net profit.

HDFC Securities’ institutional Research had expected Tata Motors to post a loss again in Q2 on a consolidated basis because of the weak performance of JLR.

Similarly, analysts at Kotak Institutional Equities forecast that consolidated net profit will rise marginally to Rs 317.9 crore.