Tata Motors (TML) announced its results for quarter ending June 30, 2023.
TML continued its strong performance in Q1 FY24 with revenues at ₹102.2K crore (up 42 percent yoy), EBITDA at ₹14.7K crore (up 177 percent yoy) and EBIT of ₹8.3K crore (higher by ₹8.8KCr), all showing a sharp improvement driven by JLR and CV businesses whilst the PV business was steady.
JLR revenues improved by 57 percent to £6.9b on strong wholesales and improved mix resulting in EBIT margins of 8.6 percent (+1,300bps). CV volumes were lower by 15 percent over prior year due to transition to BS6 Phase 2. However, the EBIT margins improved to 6.5 percent (+370bps) benefiting from the demand-pull strategy and richer mix. PV business was steady with 11.1 percent revenue growth and EBIT of 1.0 percent (+10bps). Overall PBT (bei) improved by ₹10.3K crore to ₹5.3K crore and Net Profit was ₹3.3K crore.
PB Balaji, group chief financial officer, Tata Motors said, “FY24 has begun on the right note with all automotive verticals delivering strong performances. The distinct strategy employed by each business is now delivering consistent results and making them structurally stronger. We remain confident of sustaining this momentum in the rest of the year and achieve our stated goals.”
Q2 production and cashflow is expected to be lower than Q1 reflecting the annual summer plant shutdown while wholesales and profitability are expected to be more in line with recent quarters.
Adrian Mardell, JLR chief executive officer, said, “I am pleased to report a third consecutive quarter of strengthening financial performance for JLR. We have had a strong start to the financial year and delivered our highest production levels in nine quarters and our highest Q1 cashflow on record. This is testament to the thousands of determined people in the business working tirelessly to deliver every aspect of our Reimagine strategy.”
Apart from seasonality, Q1 FY24 for the commercial vehicles industry was impacted by the transition to BS 6 Phase 2 emission norms. Domestic CV volumes were 82.4K units, down 14.1 percent yoy. Exports were at 3.6K units, down 32 percent yoy because of subdued economic conditions in overseas markets as well. However, HCV volumes grew nine percent yoy driven by the strong infrastructure push by the Government, as well as increased activity in e-commerce, construction, and replacement demand in auto logistics and petroleum sector.
Despite the drop in volumes, the revenues improved by 4.4 percent to ₹ 17.0K crore on account of improved mix and better market operating price. The business witnessed strong EBITDA and EBIT margins of 9.4 percent and 6.5 percent respectively in Q1 FY24 and reported strong PBT (bei) of ₹ 0.9 K Cr led by improved pricing, superior mix, stable commodity costs.
The promising monsoon and continuing infrastructure thrust by the Government auger well for the CV industry, even as it faces the headwinds of high interest rates, fuel prices and inflation.
Girish Wagh, executive director, Tata Motors said, “The Indian commercial vehicles sector made a promising start to FY24 in Q1, enabled by a strong infrastructure push from the Government as well as increased economic activity. At Tata Motors, we successfully upgraded our entire portfolio beyond the mandatory requirements for BS6 Phase 2 transition to offer more features, value-adds and benefits to customers. We were impacted in the earlier part of the quarter with availability issues due to this large transition but delivered sequentially improved performance as the quarter progressed. Looking ahead, we remain optimistic on the demand environment even as it continues to face the headwinds of high interest rates, fuel prices and inflation. We will continue to drive our demand-pull strategy and step up our competitiveness with improved availability of our exciting range of products as the year progresses.”
Tata PV business continued to witness robust demand in Q1 FY24. The PV volumes grew to 140.4K units (+7.7 percent improvement yoy). Revenues grew by 11.1 percent to ₹ 12.8K crs driven by improved pricing. The EBITDA margins were lower by 80 bps yoy at 5.3 percent, impacted by higher mix of EV’s and higher fixed expenses. The EV profitability is likely to improve H2 onwards. EBIT margins improved by 10 bps yoy to 1.0 percent and PBT(bei) improved by ₹ 172 crores yoy to ₹ 186 crores driven by impact of operating leverage.
The Passenger Vehicle industry in Q1 FY24 witnessed robust demand driven by new launches, especially in the SUV segment and EVs. A structured margin improvement program has also been institutionalized. With these, the business is confident of delivering market beating growth and achieving its financial targets.
Shailesh Chandra, managing director, TMPV and TPEM said, “The Passenger Vehicle industry in Q1 FY24 witnessed robust demand driven by new launches, especially in the SUV segment and EVs. At Tata Motors, we continued the growth trajectory by registering quarterly sales of 140,450 cars and SUVs in Q1 FY24 (up 8% over Q1 FY23). In line with industry trend, SUVs continued to spearhead sales contributing ~64% while sales of cars were buoyed by the multi-power train offerings of the Tiago and Altroz. We launched Altroz iCNG during the quarter and it has received much acclaim and an excellent response from customers. Continuing with our thrust on EVs, in Q1 FY24, we recorded the highest ever quarterly sales of 19,346 vehicles (up~105% over Q1 FY23). The excellent market response to Tiago EV catalysed this growth while demand for other EVs remained consistent. Going forward, we expect a stable supply chain and robust demand with the onset of the festive season in the second half of Q2 FY24.”