Tata Motors Results: Tata Motors Quarterly Results-Q1 Earnings

Tata Motors Results: Tata Motors Quarterly Results-Q1 Earnings

Last updated: 27 Jul, 2021 | 07:00 pm

Tata Motors Results: Tata Motors Quarterly Results-Q1 Earnings

Consolidated Business: 

Revenue: Rs 66406 cr (up 107% YoY/ down 25% QoQ)

Net loss: Rs 4321 cr  (down 48% YoY/ down 43% QoQ)

  • The loss figure was above analysts expectations caused by the non-recognition of deferred tax assets in this quarter.
  • Net debt stood at Rs 61300 cr (up from Rs 40900 cr as of Mar’21)
  • Tata motors has maintained its FY24 target of deleveraging the business to near-zero auto debt.  
  • Free Cash Flow (FCF) was negative at Rs 18200 cr, of which Rs 16500 cr was due to the unwinding of working capital. As demand normalizes in the second half of FY22, the working capital impact should neutralize. 

JLR Business: 

Revenue: 4966 million pounds (up 73% YoY)

Net loss: 286 million pounds (down 55% YoY)

EBITDA Margin: 9% (up 540 bps YoY/ down 630 bps QoQ)

Volumes: 97141 units (up 48.5% YoY)

  • Although the JLR’s numbers look good year over year, they are below street estimates caused by chip shortage which is expected to continue till September this year. The deliveries in the second quarter will be 50 per cent worse than initially thought. 
  • The launch of refocus transformation plan for JLR is complete and the company aims for 10% lower costs per car and increased volumes in 2nd half of FY22.
  • The launch of new Range Rover cars is not expected to be delayed. They expect one to be launched by the end of FY22 and the new Range Rover Sport to be launched in mid FY23.
  • The semiconductor shortage has made them unable to meet emission compliance. To meet compliance, it would need volumes of 12% from BEV + PHEVs. The current number stands at 8.5%. However, the order book mix supports this desired level of electrification to meet emission norms
  • Speaking of order book, JLR has an order book of 110,000 (excluding China and the US) representing 3 months of sales.

India Business:

Revenue: Rs 11900 cr (up 343% YoY)

Net loss: Rs 1300 cr (down 40% YoY)

EBITDA Margin: 2.5% (up 2870 bps YoY/ down 580 bps QoQ)

Volumes: 114,784 units (up 358% YoY)

  • Tata Motors’ total Indian volumes have taken a big hit of 40% in the Q1FY22 over the last quarter due to the 2nd wave. 
  • Not the passenger vehicle segment volumes have blown up in the past one year, but commercial vehicles volumes have increased proportionately. Total commercial vehicles volumes stood at 50,145 units (up 378% YoY) and Passenger vehicles stood at 64,639 (up 343% YoY)
  • EBITDA margins for the commercial vehicles business were flat at 0.1% v/s 9.1% in Q4FY21 and for the passenger vehicles business came in at 4.1%.
  • Demands for both passenger and commercial vehicles have reached pre second wave levels (April 2021)

Tata Motors Q1 earnings: Review

Tata Motors has reported results below street estimates, and the numbers are poor when compared to previous quarters. However this is because Tata Motors was backed against the wall in both of its segments in this quarter. In the JLR business, semiconductor shortage resulted in poor numbers and in India business, 2nd wave was the culprit. Still the company is proving to be resilient in these times and trying to reduce semiconductor usage in its cars. Both these problems are in the short term. In the long term, the company still has a positive outlook.

Even though the topline and bottomline was below estimates, operational performance was in line with consensus estimates with consolidated EBITDA margin at 7.9%. 

Tata Motors is leading the EV space currently as validated by the demand for Nexon EV, Tata Motors has announced that it plans to launch as many as 10 electric vehicles by 2025. It will also invest significantly in EV charging infrastructure. JLR business will improve with the refocus plan and the sales of the new Defender. Going forward, the company is expected to benefit from macro recovery, company-specific volume/margin drivers, and sharp improvement in FCF and leverage in the JLR and India businesses.