Tata Motors Q3 Results: Automaker swings back to profit after 7 quarters; revenue jumps 22% YoY

Auto major Tata Motors Ltd was back in the black after 7 quarters, as the company on Wednesday posted a consolidated net profit of Rs 2,958 crore for the quarter ended December, against a loss of Rs 1,516 crore a year ago. The profit figure is way higher than the ET Now poll of Rs 285 crore.

Consolidated revenue from operations rose 22.5% YoY to Rs 88,489 crore.

Consolidated revenue from operations rose 22.5% YoY to Rs 88,489 crore. The topline too, beat the estimated figure of Rs 82,738 crore.

Consolidated operating profit, calculated as earnings before interest, taxes, depreciation and amortization (EBITDA), rose 11% on year to Rs 9,900 crore and the margin improved 90 basis points to 11.1%.

Arm Jaguar Land Rover Automotive Plc (JLR) reported a strong 28% growth in revenue to 6.04 billion pound sterling, and earnings before interest and tax (EBIT) margin expanded a sharp 230 basis points YoY to 3.7%. EBITDA margin, however, dipped 10 bps to 11.9%.

Tata Motors’ standalone net profit for the third quarter jumped nearly 3-fold to Rs 506.19 crore, and revenue increased 28% YoY to Rs 15,794 crore.

JLR
The luxury carmaker delivered on its plans and achieved positive free cash flow and profitability in the quarter, as supplies improved. The 28% YoY growth and 15% sequential rise in revenue, reflect better supplies, a strong model mix, and pricing.

The profit before tax in the quarter was 265 million pound sterling against a loss of 9 million sterling a year ago. The 230-bps expansion in profitability reflects increased wholesale volumes with a favourable mix, pricing, and foreign exchange, offset partially by higher inflation and supplier claims largely related to constrained volumes, the company said.

Free cash flow for the quarter was 490 million sterling.

Tata Motors remains cautiously optimistic about the demand situation despite global uncertainties.

“We will remain vigilant on demand and our continued focus on profitable growth, improving semiconductor supplies and stable commodity prices will aid revenue growth, margin improvement, and positive cash delivery in Q4,” the automaker said.
Wholesales in China during the quarter were impacted by lockdowns, leading to dealer closures followed by high rates of staff absence as Covid-19 restrictions were relaxed.

“The situation is expected to recover in the fourth quarter with our dealers open and staff absence closer to normal levels in January,” JLR said.

Although there continues to be supply chain and other macro risks, JLR’s guidance for the full year remains unchanged.

Positive EBIT margin and free cash flow in Q4 FY23 on wholesales of 80,000 or more units are expected to achieve breakeven free cash flow and a positive EBIT margin for the full year, it said.

“JLR returned to profit as chip shortages eased in the quarter and production and wholesales increased. We remain committed to our Reimagine strategy which will transform JLR into an all-electric modern luxury business, whilst delivering our SBTi climate goals and striving to exceed our clients’ expectations,” Adrian Mardell, JLR’s interim CEO was quoted as saying in the release.

Tata Commercial Vehicles
Tata CV’s revenue rose 22.5% YoY to Rs 16,900 crore, while the operating margin expanded by a whopping 580 bps to 8.4%, led by a better mix, higher realisations, cost savings, and softened commodity prices. The business was back in the black at the pre-tax level.

Tata Passenger Vehicles
Tata PV’s revenue rose 37% YoY to Rs 11,700 crore, reflecting higher volumes and realizations. EBITDA margins improved 370 bps to 6.9%, driven by improved volumes and better product mix, higher realizations, softening commodities, and certain one-offs.

Going forward, Tata Motors will maintain agility and keep a close watch on the evolving geopolitical, inflation, and interest rate risks on both supply and demand, Girish Wagh, executive director - commercial vehicles, said.

The December quarter was one of the best for the passenger vehicle industry, as Tata Motors saw its highest-ever retail sales which crossed 50,000 units.

Other Metrics
Finance cost increased to RS 2,676 crore in the quarter from Rs 2,401 crore a year ago due to higher gross borrowings. For the quarter, net profit from joint ventures and associates was Rs 103 crore compared with a loss of Rs 113 crore a year ago.

Free cash flow for the automotive segment in the quarter, was positive at Rs 5,300 crore, compared to Rs 4,000 crore a year ago, owing to improvement in cash profits and working capital.

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