Q2FY24 Preview: Tata Motors: Revenue seen at Rs. 1,082,129 million, PAT at Rs. 41,646 million

1 Nov 2023 , 10:16 AM

Result date: November 2, 2023

Recommendation: Buy

Target price: Rs. 750

On a standalone basis, Tata Motors posted flattish volume growth (over the year-ago quarter) and 8% growth sequentially. Favorable operating leverage, higher revenue share of commercial vehicles are key margin tailwinds. On the flipside, higher discounting in commercial vehicles is likely to be a key margin headwind.

As far as the JLR business is concerned, volumes (ex-China JV) grew 29% over the year-ago quarter and 4% sequentially. Analysts at IIFL Capital Services expect volume share of high-margin “RR + RR Sport + Defender” to remain steady at 64%. Sequentially, higher volume share of low-margin Jaguar (14% versus 11%) and reversal of favorable “production-sales” differential benefit in Q1 (100 basis points) are key margin headwinds.

Analysts at IIFL Capital Services expect the company’s consolidated revenue to grow 36% over the year-ago quarter and Profit After Tax (PAT) to decline over 700% as compared to the year-ago quarter.

Important management insights to watch out for:

• Demand outlook across markets
• Outlook for JLR production

Consolidated	September 2023 estimates	YoY change	QoQ change
Revenue (Rs. mn)	1,082,129	35.9%	5.8%
EBITDA (Rs. mn)	135,460	118.6%	(0.1)%
EBITDA margin (%)	12.5%	473 bps	(75) bps
Profit After Tax (Rs. mn)	41,646	(757.6)%	(1.3)%

Source: IIFL Research