Tata Motors Q3 earnings update
Last updated: 29 Jan, 2021 | 02:18 pm
Company returns to profit: Tata Motors posted a profit after three consecutive quarters in the previous quarter, as both JLR sales and domestic PV sales rose amid festive season and preference for personal mobility in the pandemic. The company has reported a net profit of ₹2,941 crore, as compared to a net profit of ₹1,738 crore in the year-ago period.
Revene rises: Tata Motors' revenue rose 6% on-year to Rs 75,654 crore, against the Rs 76,659-crore forecast.
PV(Passenger Vehicles) sales impress, CV( Commercial Vehicle) recovers: Due to a strong festive season and a clear preference for personal mobility, the PV business posted its highest sales in last 33 quarters. PV sales rose 56% on-year to 77,200 units. PV Market Shares improved to 7.8% (vs 4.8% in FY20).
The Commercial Vehicle segment too recovered with CV retails at 74,900 (up 96% from Q2, -24% y-o-y). This segment could remain under pressure as customers continue to practise social distancing amid the pandemic. Overall, Tata Motors sold 1.50 lakh units in the domestic market in the reported quarter, up 24% from the year-ago quarter.
JLR (Jaguar Land Rover) recovery continues: Recovery in the UK subsidiary Jaguar Land Rover continued with retail sales at 1,28,469 vehicles, up 13.1% on QoQ but still 9% lower than pre-Covid levels a year ago. The recovery was aided by faster recovery in China (up 20.2% on the prior quarter and up 19.1% year-on-year).
The significant improvement reflects revenue of £36 billion, up £31.6 billion from Q2 while still lower than preCovid levels a year ago, with favourable sales mix, cost performance and partial reversal of prior period reserves. EBIT margin improved to 6.7% (+400 bps year on year).
Positive Free Cash flows: The company reported positive free cash flows in both Jaguar Land Rover (£3,562 million) and Tata Motors Ltd (₹2,200 crore).
After a complete washout in April, the auto industry has recovered fasted that anticipated earlier on the back of pent up demand and festive season boost. Tata Motors ramped up production during the festival season to make up for the washout during the initial months of the lockdown. Also, its decision to hike prices from January may have prompted pre-buying in December.
JLR sales have also seen improvement led by faster recovery in China sales. Challenges continue for JLR, including Covid-19 impact on the global economy, the UK's new trading relationship with the European Union and technology changes taking place in the automotive industry. The company expects to deliver strong EBIT margins and positive FCF in Q4 for its JLR business. The management is confident of achieving the targeted savings of ₹6,000 crore and expects to finish strong this fiscal year.