Tata Motor records Rs 1,451 cr consolidated loss in Q3

Chennai: Tata Motors Group missed street estimates to see a sharp drop in consolidated net profits in the third quarter on account of the chip shortage hitting production at Jaguar Land Rover and the raw material price pinch on passenger and commercial vehicles in India. The company clocked a consolidated loss of Rs 1,451 crore in Q3 compared to a profit of Rs 2,941 crore in the year-ago period. Consolidated revenue of Rs 72,229 crore was down 4.5% at Rs 75,654 crore while Ebitda shrank 34% to Rs 7,395 crore compared to Rs 11,225 crore in the year ago quarter. Ebitda margin shrank 460 bsp to just over 10% compared to just under 15% last Q3. However with both passenger and commercial vehicle sales picking up speed in India and steel prices looking to stabilize, the company expects Q4 margins to be substantially better. Tata Motors which currently has a total Rs 50,000 crore debt, is targeting to be net debt free by FY24.

“In the domestic market, we took a 430 bsp hit on the margin due to commodity prices and a further 80 bsp (Rs 174 crore) hit due to the subsidiarization of the passenger vehicle business,’’ said group CFO PB Balaji. “In JLR, revenue has been impacted by the ongoing chip crisis though production is up 41% quarter on quarter and we have a 1,55,000 units order book. So Q4 should see improved numbers,” he added. JLR clocked a profit before tax (PBT) loss of 9 million with retail sales of 80,126 vehicles, down 37.6% over Q3 FY21. For Q3, revenue was at 4.7 billion, down 21% though compared to Q2 it’s up 22%. The company is free cash flow positive at 164 in Q3. Tata Motors is planning to monetise non core investments like JLR’s media company Spark44 which will be sold in Q4.

The standalone commercial and passenger vehicle business saw recovery with Q3 revenue Rs 21,000 crore, up 43% YoY and 14% over Q2. And although EBITDA margin is down 350 bsp at 3.3% due to commodity inflation and subsidiarization related costs, free cash flow stood at Rs 2,000 crore. Commercial vehicle sales were up 24% at 93,100 units. Passenger vehicle sales were up 41% at 1,09,000 units and EV sales hit a new peak of 5,592 units with a 6% penetration. Standalone PBT stood at a loss of Rs 834 crore. The raw material pinch came despite the fact that Tata Motors has taken a 26% price hike in commercial vehicles including BS6 since March 2020 “which is still not adequate,” said Balaji.

The company’s consolidated performance was lower than market estimate primarily “tracking lower JLR wholesale volumes,” said a report by ICICI Direct Research adding, “QoQ margin improvement was primarily on account of savings realised under raw material costs.”