Emkay Global Financial Market's research report on Tata Motors
For Q1FY23, Tata Motors’ consolidated EBITDA declined by 64% qoq to Rs32bn, 58% below our estimates, due to commodity hedging losses and adverse mix at JLR. Revenue declined by 8% to Rs719bn, 3% below our estimates, because of realization miss at JLR due to lower-than-expected sales of RR/RR Sport. JLR’s order book is strong at ~200,000 units. Models such as Defender and newgeneration RR/RR Sport form ~65% of order bookings, which should lead to product-mix improvement going ahead. Chip supplies are expected to improve in a staggered manner going ahead. We expect a 15% volume CAGR over FY22-24E. We estimate FY22-24E India CV/PV volume CAGRs of 16%/28%, driven by continued upcycle in industry sales and better chip supplies. The focus remains on E-PVs, with medium-term investments of US$2bn toward new products, capacity expansion, localization, and charging infrastructure.
We reduce FY23E consolidated EPS by 9%, factoring weak Q1 results, and FY24E EPS by 7% due to lower volume assumptions of JLR. We reaffirm Buy with an SOTP-based TP of Rs530 (unchanged), based on Sep’24E (June’24E earlier) estimates.
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