Q3FY23 Preview: Tata Motors: Revenue seen at Rs853,460 million, PAT at Rs1,723 million

24 Jan 2023 , 10:18 AM

Result date: 25^th January, 2023

Recommendation: Buy

Target price: Rs530

 

The JLR business witnessed volume growth (ex-China JV) of 15% over the year-ago quarter and 6% sequentially. Sales mix remained favorable with share of “RR + RR Sport and Defender” up from 45% to 65% on a sequential basis. Improvement in model mix and operating leverage are key margin tailwinds, while reduction in China share from 17.6% to 14.6% QoQ is a key margin headwind on a sequential basis.

Sales volumes of the domestic business grew 14% over the year-ago quarter, but fell 6% sequentially. Fall in commodity prices and price hikes are prominent margin tailwinds while negative operating leverage is a key margin headwind sequentially.

Analysts at IIFL Capital Services expect Consolidated revenue of Tata Motors to grow 18% over the year-ago quarter and 7% sequentially.

Consolidated profitability of Tata Motors is likely to be impacted by a one-time impact from MTM of forex debt (GBP appreciation versus USD). Reversal in net loss of both JLR and domestic business could drive consolidated Profit After Tax (PAT) on a year-on-year basis.

Important management insights to watch out for:

• Demand outlook across key markets and segments
• Margin outlook along with key levers thereof

	December 2022 estimates	YoY change	QoQ change
Revenue (Rs mn)	853,460	18.2%	7.2%
EBITDA (Rs mn)	86,831	28.4%	40.1%
EBITDA margin	10.2%	81 bps	239 bps
Profit After Tax (Rs mn)	1,723	(109.0)%	(127.2)%

Source: IIFL Research