Tata Motors Q4 Results Outlook [11-05-2023]: Strong Beat; JLR Targets To Cut Net Debt By £2 Billion In FY24: Motilal Oswal

Tata Motors Q4 Results Outlook [11-05-2023]: Sales of the company’s U.K.-based arm Jaguar Land Rover, excluding the joint venture in China, rose 24% to 94,649 units as supply of semiconductors improved. While sales of Land Rover models rose, Jaguar’s dispatches fell 27%.

  •  Ebitda margin stood at 12.4% versus 10.6%. Analysts had forecast it at 11.9%.
  • Revenue rose 35% to Rs 1.06 lakh crore, as against a Bloomberg estimate of Rs 1.03 lakh crore.
  • Ebitda rose 58% to Rs 13,114 crore, as compared with a Bloomberg estimate of Rs 12,181 crore.

Improved performance at JLR also helped in margin expansion at the consolidated level. Ebitda margin at the commercial vehicle business improved 420 basis points, while it went up by 200 basis points at JLR.

Easing inflation, better mix, pricing actions and favourable operating leverage resulted in improvements in margin and profit, the company said in its press release.

Its India business net debt came down to a 15-year low of Rs 6,200 crore due to strong performance in FY23, it said.

Tata Motors will aim for higher realisations and cost savings to secure double-digit Ebitda margin for FY24 in the commercial vehicle business.

“In FY24, we aim to continue to deliver market-beating growth, sustain aggression in driving up EV penetration, consolidate market share gains, drive actions to reach double-digit Ebitda in the coming years and sustain positive free cash flows,” it said, highlighting the plans for the passenger vehicle business.

The automaker also plans to integrate the new Sanand factory into its industrial footprint to unlock capacity.

JLR Performance

The British luxury carmaker’s revenue rose 49% to £7.1 billion, with a free cash flow of £815 million in the quarter.

Net debt improved to £3 billion, as of March 31, 2023, with cash of £3.8 billion and liquidity of £5.3 billion, including undrawn £1.52 billion revolving credit facility, the company said.

Its order book remains strong at 2 lakh units with Range Rover, Range Rover Sport and Defender representing 76% of the pending orders.

The twin brand company is aims to achieve EBIT margin of 6% in the ongoing fiscal, up from 2.4% in the year ended March.

“Investment spending is expected to increase to about £3 billion in the fiscal, but free cash flow is expected to be >£2 billion and net debt is expected to reduce to <£1 billion by FY24,” the company said.

With new agreements for specialised semiconductors for JLR, the worst of the semiconductor shortage is over for the company, PB Balaji, group CFO at the company, told media in a call to discuss the fourth-quarter results.

The company has lined up capex of Rs 38,000 crore for FY24, up from Rs 30,000 crore in the year ended March.

Shares of Tata Motors ended 0.4% higher before the results were announced, as compared with a 0.1% rise in the benchmark Nifty 50.

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Neal Bhai has been involved in the Bullion and Metals markets since 1998 – he has experience in many areas of the market from researching to trading and has worked in Delhi, India. Mobile No. - 9899900589 and 9582247600