Tata Motors Q4 Results: Reports a loss for the fifth straight quarter

Tata Motors Q4 FY22 Earnings
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Loss continues: Tata Motor Ltd. reported a net loss of Rs 1,032.84 crore for the Jan-Mar period. In Q3FY22, the company reported a net loss of Rs 1,451 crore. Last year during the same period the company reported a net loss of Rs 7,605.40 crore. This is the fifth straight quarter the company has reported losses. Analysts had earlier estimated the company to make a profit of Rs 12.8 crore. 

Revenue decline: The revenue for Q4FY22 fell by 11.42% YoY and stood at Rs 78,439.06 crore from Rs 88,627.90 crore in the year-ago period. Sequentially, the revenue is up by more than 8.5%. The revenue is below the Street estimate of Rs 82,386 crore.

EBITDA and margins: Earning Before Interest, Tax, Depreciation, and Amortization (EBITDA) stood at Rs 6445 crore and EBITDA margin came at 11.2%, down 320 basis points. The EBIT margin declined from 7.1% in Q4FY21 to 3.2% in Q4FY22. The margins were impacted by the increase in commodity prices.

Tata Motors India Update: The India business of the company performed well. The revenues in the commercial vehicle segment jumped 29.3% and in the passenger vehicle vertical rose 62% on-year. 

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The operating margin of the CV business shrank 290 basis points on-year to 5.9 percent in the reported quarter. However, price hikes in the passenger vehicle segment helped that vertical to expand its operating margin by 190 basis points on-year to 6.9 percent.

JLR Update: JLR’s EBIT margin for Q4FY22 was 2% and free cash flow was £340 million reflecting the higher wholesales offset partially by the impact of the runout of the previous generation Range Rover, with the New Range Rover still ramping up. The revenue for the Jan-Mar period was £4.8 billion, up 1% from Q3FY22. Demand remains strong with a record order book of almost 168,000 vehicles, up 13,000 units from Q3 reflecting strong demand for the New Range Rover. 

JLR also took an exceptional charge of 43 million pounds on its business in Russia, which was affected by the Russia-Ukraine war.

FY23 Outlook: The company has said that the demand is likely to remain strong despite geopolitical and inflation concerns. The supply situation is gradually improving. However, commodity inflation is likely to remain at elevated levels. The company aims to deliver strong improvement in EBIT and free cash flows to get to near-zero net auto debt by FY24. It expects performance to improve through FY23 as COVID-led lockdowns in China abate and the semiconductor situation improves.

Management Commentary: "We remain agile and will continue to take prudent actions while enhancing our focus on future-fit initiatives of transforming customer experience digitally and strengthening our established lead in sustainable mobility,” said Shailesh Chandra, MD at Tata Motors Passenger Vehicles and Tata Passenger Electric Mobility.

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