Tata Motors Q1 Results: Losses widens to Rs 5,007 crore, Revenue remains flat

Tata Motors Q1 Results

Tata Motors reported its Q1FY23 results on Wednesday evening, and the result surprised most, as the loss widened to Rs 5007 crore. Tata Motors share price fell 0.5% on Thursday morning at Rs 442 per share. The share price has fallen 11% YTD.

Key highlights from Tata Motors' Q1FY23 results:

  • Profit/Loss: Loss of Rs 5006.60 crore
  • Revenue: Rs 71,227.76, up 8.68%

Let us look at all the June quarter numbers in detail:

Tata Motors Q1 Losses widens

 Tata Motors reported a net loss of Rs 5006.60 crore for the Apr-Jun period. In Q4FY22, the company reported a net loss of Rs 1,032.84 crore. Last year during the same period, the company reported a net loss of Rs 4,450.92 crore. This is the sixth straight quarter the company has reported losses. Analysts had earlier estimated the company to report a loss of Rs 1707 crore.

Tata Motors Q1 Results: Revenue remains flat

The revenue for Q1FY23 increased by 8.68% year on year and stood at Rs 71,227.76 crore from Rs 65,535.38 crore in the year-ago period. Sequentially, the revenue declined from Rs 78,439.06 crore. The revenue is below the Street estimate.

Tata Motors Q1 results 2022: EBITDA and margins

 Earning Before Interest, Tax, Depreciation, and Amortization (EBITDA) stood at Rs 5,300 crore, and EBITDA margins came at 7.4%, down 90 basis points. The EBIT margin came at -0.7% in Q1FY23, up 60 bps. The margins in the June quarter were impacted by the increase in commodity prices.

Tata Motors Q1 FY23 India Update

 The India business of Tata Motors performed well. The domestic wholesales were at 95,895 vehicles (+124% year-on-year). Exports were at 5,218 vehicles, down 22.6%, affected by a financial crisis in a few export markets. The margin improvement was aided by realisations, higher volumes, and stable commodity prices. The passenger vehicle business continued its strong momentum with wholesales at 130,351 vehicles, up 101.7% compared to the year-ago period.

Tata Motors Q1 2022 JLR Update 

JLR’s EBIT margin for Q1FY23 was -4.4%, down 350 bps and free cash flow was negative in the quarter at £(769) million, primarily reflecting £(616) million of unfavourable working capital movements. The revenue for the Apr-June period was £4.4 billion, down 7.6% from Q4FY22. 

The revenue was impacted by supply challenges including semiconductor shortages, China lockdowns, and slower than expected ramp-up of the New Range Rover and New Range Rover Sport production. Retail sales in Q1FY23 were 78,825 vehicles, broadly flat sequentially and down 37% compared with Q1FY22. 

Tata Motors Outlook

 The company expects demand to remain strong despite geo-political risks and worries about inflation while the supply situation is expected to improve further. Cooling commodity prices will aid improvement in underlying margins. The company aims to deliver strong improvements in free cash flows and EBIT from Q2 onwards to get to near net auto debt free by FY24.

Tata Motors Q1 Results 2022: Analysts' view

Jefferies: The firm has cut FY23 EPS by 24% but retained a BUY call on Tata Motors with a target price of Rs 540 per share. India's business performed well with CV EBITDA and PV EBITDA broadly inline. Tata Motors expects JLR performance to improve significantly starting Q2 as RR/RR-Sport production ramps up amid a strong order book.

Nomura: Foreign broking house Nomura has maintained ‘Buy’ rating on the stock with a target at Rs 520 per share. As per the firm, Q1 was a miss, while deleveraging is a key driver for stock. The M&HCV recovery is on track, and PVs to ramp up further. JLR to benefit from improved chip supply.

CLSA: Research firm CLSA has retained outperform rating on the stock and raised the target price to Rs 494 from Rs 453 per share. The company reported a very weak quarter largely led by significant deterioration in JLR. We take comfort from JLR’s growing order backlog and strong domestic business, said CLSA.

Motilal Oswal:  As per the firm, Tata Motors should witness a gradual recovery as supply-side issues ease (for JLR) and commodity headwinds stabilize (for the India business). It will benefit from: a) a macro recovery, b) company-specific volume and margin drivers, and c) a sharp improvement in FCF and leverage in both JLR as well as the India business. Motilal maintains a ‘Buy’ rating, with a target price of Rs 520/share.

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