Indian automobile manufacturer Tata Motors reported a significant turnaround in its financial performance during the first quarter of fiscal year 2023-24 (Q1 FY14). The company announced a consolidated net profit of Rs 3,203 crore, a notable improvement compared to the net loss of Rs 5,006.60 crore in the same quarter of the previous fiscal year. This impressive recovery was attributed to the improved margin in its passenger vehicle (PV) business and robust sales at its luxury car unit, Jaguar Land Rover (JLR).
The revenue from operations saw a substantial 42 percent increase to reach Rs 1.02 lakh crore during the quarter. Additionally, the earnings before interest, taxes, depreciation, and amortisation (EBITDA) surged by 177 per cent to Rs 14,700 crore.
Tata Motors’ Group Chief Financial Officer, P.B. Balaji, expressed his satisfaction with the strong performances delivered by all automotive verticals, stating that each business’s distinct strategy had resulted in consistent and robust results, making them structurally stronger. The company is optimistic about maintaining this momentum throughout the year and achieving its stated goals.
Jaguar Land Rover (JLR) played a significant role in Tata Motors’ positive financial outcome. JLR’s revenues experienced a notable 57 percent growth to £6.9 billion, primarily due to strong wholesales and an improved product mix. This led to earnings before interest and taxes (EBIT) margins of 8.6 per cent, signifying a remarkable increase of 1,300 basis points. On the other hand, commercial vehicle (CV) volumes faced a 15 per cent decline compared to the previous year due to the transition to BS6 Phase 2. However, the EBIT margins for CVs improved to 6.5 per cent, showing a growth of 370 basis points, thanks to the demand-pull strategy and a richer mix. The PV business remained steady with 11.1 percent revenue growth and EBIT of 1.0 percent.
The company revealed a positive free cash flow of Rs 2,500 crore (automotive) during the June quarter, primarily driven by a strong improvement in cash profits. This reduction in debt led to the net automotive debt being reduced to Rs 41,700 crore.
Tata Motors also reported a 5 percent year-on-year (YoY) increase in global wholesales, including JLR, amounting to 3,22,159 vehicles in Q1 FY24. Of these, PV sales rose by 8 percent to 140,450 units. JLR wholesales stood at 10,324 and 82,929 vehicles, respectively, contributing to a total of 93,253 units, marking a significant 30 percent growth over the same quarter in the previous year.
Adrian Mardell, JLR’s Chief Executive Officer (CEO), expressed satisfaction with the company’s strong start to the financial year, achieving the highest production levels in nine quarters and the highest Q1 cash flow on record.
The company’s financial performance exceeded the average of estimates from five brokers, which projected a net profit of Rs 2,546 crore.
Tata Motors remains optimistic about the demand situation despite some near-term uncertainties. The company anticipates a moderate inflationary environment to continue in the near future. It aims to deliver a strong performance for the rest of the year, supported by a healthy order book, low breakeven in JLR, steady improvement in demand with a demand-pull strategy in CVs, exciting launches ahead of the festive season in PVs, and a continued focus on electric vehicles (EVs).
On July 25, Tata Motors’ scrip closed 1.62 percent higher at Rs 639.45 apiece on BSE.
