Tata Motors will report its October-December 2022 quarter numbers on January 25 after market hours and the Street is expecting the auto major to swing back to black with net profit estimates anywhere between Rs 300-800 crore.
The company had reported a loss of Rs 1,516 crore in Q3FY22, and a loss of Rs 945 crore a quarter ago. This indicates the company is expected to post profit after recording losses for seven consecutive quarters. The last time Tata Motors posted a quarterly profit was in October-December 2020.
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Consolidated sales are expected to rise over 14.5 percent year on year (YoY) and 3.9 percent sequentially to Rs 82,718 crore, estimates of analysts across four brokerages show.
Apart from a low base effect, the improvement in earnings will largely be driven by strong growth in domestic passenger vehicle and commercial vehicle sales. For the month of December 2022, the company had reported a 10 percent increase in total domestic sales at 72,997 units.
Passenger vehicle sales in the domestic market stood at 40,043 units as against 35,299 units in December 2021, a growth of 13.4 percent.
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Analysts believe Jaguar Land Rover's volumes will also grow on a yearly basis due to easing chip shortage issue. A report by Kotak Institutional Equities states, "We expect JLR volumes (excluding China JV) to increase by 4 percent sequentially, led by improvement in chip availability."
"Overall, we expect revenues (ex-China JV) to increase by 6 percent QoQ, mainly due to higher mix of Range Rover," it added.
It expects EBITDA (earnings before interest, taxes, depreciation, amortization) margin to improve to 5.2 percent in Q3 FY23 from 4.4 percent in Q2 FY23.
"Margins will see an uptick driven by benefits of RM (raw material) cost moderation, along with benefits of favorable FX," as per Motilal Oswal Financial Services.
In terms of management commentary, the Street will be keenly monitoring JLR demand outlook in Europe and China, improvement in semiconductor issues, update on acquisition of Ford's Sanand plant and electric vehicle sales.
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