Tata Motors Q4FY23 Preview: Expect 30% YoY rise in revenue, 5-7x YoY growth in net profit

In the year ago quarter, it had narrowed its losses to Rs 992.05 crore.

Tata Motors is expected to see a healthy rise in revenue and a significant turnaround in net profit in the quarter ended March, over the year ago. It is expected to post between 31-35 percent year-on-year growth in revenue and a nearly 5-7x increase in net profit over the same period.

Sequentially, it is expected to see around 49 percent growth in net profit. In the previous quarter, the company posted its first profit in two years with Rs 2,957.7 crore.

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Analysts estimate that the company’s revenue to be between Rs 1,03, 148 crore and Rs 1,06,103 crore from Rs 78,439 crore a year ago and adjusted net profit to be between Rs 3,100 crore and Rs 5,224 crore. In the year-ago quarter, it had narrowed its losses to Rs 992.05 crore.

“JLR margins likely to improve 150bps QoQ to 13.4 percent on the back of good pick up in volumes,” wrote analysts from HDFC Securities’ report.

Jefferies, which has a buy rating on the stock with a target price of Rs 600, has said that the company’s improved strategy and cyclical recovery in India are likely to act as “a big turnaround in Tata's business performance”.

“Tata has made a strong comeback in Indian PV led by a strong SUV focus, better products and improved brand positioning. Tata has taken an early lead in electrification in India, with EVs now contributing ~15 percent of its India PV volumes vs ~2 percent for the industry. Tata intends to expand its electric PV portfolio from 3 EVs at present to 10 by FY26,” they wrote.

On JLR, they noted that the company management has been focussing on improving profit and cash flow with an emphasis on selling higher-margin SUVs, and reducing break-even. “It is lagging behind peers on EVs but has embarked on a new roadmap giving it a fresh chance to catch up over 2024-26. - By FY25, we expect Tata's consolidated EBITDA to more than double vs FY23E, EPS to reach a new all-time high, and a de-levered automotive balance sheet,” they wrote

Elara’s analysts have said that the revenue for the auto OEMs under their coverage (excluding -Tata Motors) was likely to improve by 22 percent YoY and 7 percent QoQ in Q4FY23 while for ancillaries it is set to grow 13 percent YoY and 1.2 percent QoQ.