Tata Motors In Top Gear: Reports net profit of ₹2,958 crore in Q3, its first after seven quarters

• Tata Motors on Wednesday reported its first consolidated net profit after seven quarters at ₹2,958 crore in Q3, beating analyst expectations.
• Softening commodity costs, strong growth in domestic sales and its luxury arm Jaguar Land Rover’s wholesales helped the company swing back to profitability for the first time after the December 2020 quarter.
• Easing chip shortage and a more favourable product and pricing mix aided JLR, which said its order book touched a new record of 2.15 lakh units at the end of Q3.
• JLR maintained its guidance of achieving breakeven cash flow and positive earnings before interest and taxes (EBIT) margin for FY23.

Tata Motors on Wednesday reported a market-beating consolidated net profit of ₹2,958 crore, swinging to profits for the first time after seven quarters. A 17.7% on-year increase in domestic sales and a 15.5% growth in its UK subsidiary Jaguar Land Rover’s wholesales helped Tata Motors turn profitable.

Improved realisations, softening commodity prices and cost control measures also helped Tata Motors shore up its margins and return to profitability.

The last time Tata Motors posted a consolidated net profit was in December 2020, at ₹2,906 crore.

The company’s December-quarter consolidated revenue also beat analyst expectations, growing 22.5% YoY and 11.2% sequentially, to ₹88,489 crore.

Tata Motors’ consolidated Q3 numbers:


Source: Company reports

Robust domestic demand for commercial and passenger vehicles drives India business to profitability

An uninterrupted festive season and new launches also drove Tata Motors’ sales during Q3 – the company said it touched the 50,000 monthly retail sales mark for the first time during this quarter.

“Q3 FY23 was one of the best quarters for the passenger vehicle industry with strong retails from new launches, robust festive demand, and adequate supply of vehicles. Tata Motors posted its highest-ever quarterly retails in Q3 FY23 and crossed the 50,000 units of monthly retail for the first time,” said Shailesh Chandra, managing director, Tata Motors Passenger Vehicles and Tata Passenger Electric Mobility.

In terms of cars sold, Tata Motors reported a 17.7% YoY increase in its domestic sales to 2.23 lakh units in Q3, even though exports nearly halved to 5,168 units from 10,103 units a year ago. Steady commercial vehicle demand helped the company register a rebound in its Indian business.

“In Q3 FY23, the commercial vehicle industry witnessed a steady, overall demand. Our focus on creating ‘Demand Pull’ from customers and sustained emphasis on retail in Q3 FY23 resulted in retail sales surpassing wholesale by 6.3%, thereby enabling reduction in inventory as we transition towards BS VI phase-2 norms,” said Girish Wagh, executive director, Tata Motors.

The company also added that it has received over 20,000 orders for the Tiago EV, with deliveries already underway. The Tiago EV starts at a price of ₹8.49 lakh (ex-showroom).

It also expanded its lineup of electric vehicles at the recently concluded Auto Expo, with the Harrier EV and Sierra EV unveiled at the show.

Tata Motors’ India business at a glance:


Source: Company reports

JLR achieves profitability and reports a free cash flow of £490 million

The tide also turned for Tata Motors’ UK subsidiary Jaguar Land Rover, which achieved profitability in the December quarter at £265 million, from a loss of £9 million in the same period last year.

“JLR has returned to profit as chip shortages eased in the quarter and production and wholesales increased. These improved results are testament to the hard work and dedication of our people across the business who have delivered a further increase in production of our New Range Rover and Range Rover Sport models,” said Adrian Mardell, JLR’s interim chief executive officer.

JLR’s topline also registered a growth of 28% YoY and 15% sequentially to hit the £6 billion mark in Q3. The revenue growth was led by a growth in wholesales, along with a favourable product and pricing mix, the company said, reporting a free cash flow of £490 million, topping the £400 million expected by analysts.

JLR maintained its guidance of achieving breakeven cash flow and positive earnings before interest and taxes (EBIT) margin for FY23.

Its order book touched a new record at 2.15 lakh units. In terms of unit sales, JLR reported a 15% YoY increase in its wholesales to 79,951 units in Q3 (ex-China), while its retail sales grew 6% during this period.

China volumes impacted, but JLR expects recovery in Q4

Relaxation of Covid-19 restrictions in China led to high rates of staff absence, resulting in dealer closures. This impacted the company’s wholesales in China. The company’s China unit, Chery JLR, reported a volume of 12,745 units in Q3, down from 13,928 units a year ago.

“The situation is expected to recover in the fourth quarter with our dealers open and staff absence closer to normal levels in January,” the company said.

Tata Motors said it remains “cautiously optimistic” about the demand scenario despite the global economic uncertainties, adding that it is working to further strengthen its supply chain going forward.

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