Tata Motors’ second quarter’s combined net loss decreased to Rs. 944.6 crores.
On November 9, Tata Motors reported a combined net loss of Rs. 944.6 crores for the second quarter that ended in September, narrowing from a loss of Rs (Q2FY23). In the same period last year, the domestic multinational vehicle manufacturing Company made a net loss of Rs. 4,441.57 crores (Q2FY22).
The Mumbai-based Company’s combined income from operations climbed 29.7% year over year during the period under review, from Rs 61,378.82 crores to Rs 79,611.3 crore. The Earnings minus Earnings, Tax, Amortization, & Amortization (EBITDA) margin, which measures business profit, improved in Q2FY23 by 130 percentage points (bps) over the other year, or 9.7%.
The Indian automaker’s domestic, commercial vehicle sector saw sales rise by 19% over Q2 FY22 due to higher sales of medium and large trucks (MHCVs) and a strong recovery in demand for the passenger carriers.
In the middle of high holiday demand and debottlenecking efforts, Tata’s passenger vehicle (PV) division has maintained its positive trend with resellers at 142,755 units (+69% Year on Year & 10% Quarter on Quarter).
“In light of the current global uncertainty, demand will continue to be a major monitorable. Therefore, the Company aims to generate major increases in EBIT (profits before tax and interest) & free money flow in the second half of FY23. Improving chip availability and cooling crude prices would aid revenue and margin recovery, “According to a BSE filing by Tata Motors.
According to a filing to the BSE, wholesale volumes (excluding the China JV) of 75,307 were up 17.6% YoY & 4.9% on the other quarter, and Tata Motors’ Jaguar Led Rover (JLR)revenue has been £5.3 billion across Q2FY23, up 36% YoY from Q2FY22. This increase can be attributed to a solid model mix and pricing.
According to Tata Motors, JLR is continuing to focus on concluding long-term collaboration agreements with chip suppliers, enhancing the predictability of future chip supply.
According to the Company, sales and production volumes are anticipated to increase, positive profitability and cash flow are expected in the second quarter of FY23, and total cash flow is expected to be close to breakeven for the complete fiscal year.
While some experts expected the Company to see considerable topline growth, others expressed skepticism about its own bottom line. Some of them anticipate a major quarter-over-quarter (QoQ) decline in net losses, while others forecast a marginal rise in net profit. Academic Research at HDFC Markets had forecast that Tata Motors would once again declare a loss in Q2 on a consolidated basis due to JLR’s poor performance.
Analysts at Kotak Institutional Equities forecast a modest increase in combined net profit to Rs 317.9 crore. Jaguar Land Rover is still focusing on concluding long-term collaboration agreements with chip manufacturers, which is enhancing the visibility of ongoing chip supply.
Sales and production volumes are expected to increase. The business said in a BSE filing that free money flow is expected to be close to breakeven for the entire fiscal year, with positive profits and money flow projected in the second quarter of FY23.
Domestic retails rose more quickly than wholesale (+23% YoY). Although still hit by residual commodity prices and foreign exchange, increasing volumes and realizations boosted the margin increase.
Strong holiday demand and debottlenecking initiatives saw Tata Motors PV wholesales grow 69% to 1,42,755 in Q2; its EBIT margins increased by 200 bps YoY to 0.4% on account of higher volumes, a better mix, and better realizations. Tata Motors noted that residual material inflation and unfavorable foreign exchange rates had an impact on margin recovery.
Tata Motors stated in its outlook that demand is still high and would be closely monitored in light of recent global uncertainty. “Strong improvement in EBIT and free cash flow are targeted to be delivered in H2 FY23,” the Company stated. “Improving chip supplies and lowering commodity prices will boost revenue and margin recovery.”
“In Q2 FY23, demand for passenger cars remained high thanks to the holiday season, new models, and an increasing semiconductor supply. With sales of 1,42,325 vehicles throughout the quarter, Tata Motors reached new heights. This is a jump of over 70% from Q2FY22, with SUV sales accounting for 66% of the monthly PV sales.
According to Shailesh Chandra, MD of Tata Motor PV & Electric Vehicles Ltd., the Company reported record-breaking sales of 11,522 pieces of electric vehicles in Q2FY23, representing an increase of 326% over Q2 FY22.
Despite ongoing semiconductor supply issues, according to Jaguar Land Rover CEO Thierry Bolloré, the Company’s financial performance improved in the 2nd period as manufacturing of the “new Range Rover & Range Rover Sport” ramped up. Another development is that Tata Motors has informed the NYSE of its intention to voluntarily disband its American Depositary Shares (ADSs) in Jan 2023 and to end its ADS program.
“Since the Company’s ADSs were released in 2004, the Indian equity stock markets have seen significant growth in liquidity and global shareholder participation. The company has also taken into account the steady decline in the percentage of outstanding ADSs compared to its current Ordinary Shares. As a result, there is now far less justification for ADS registration in the United States, “the Company claimed. On the NSE, Tata Motors’ stock price ended the day down 0.44% at 433.1.
edited and proofread by nikita sharma