With a combined net profit of Rs 3,203 crore for the first quarter of fiscal year 2023–24 (Q1 FY14), Tata Motors returned to profitability on July 25. This was made possible by the improved margin of its passenger vehicle (PV) business and strong sales at its luxury automobile division, Jaguar Land Rover (JLR).
On revenues of Rs 71,934.66 crore, the auto manufacturing company posted a net loss of Rs 5,006.60 crore in the first quarter of FY23.
In the quarter under review, operating revenue grew by 42% to Rs 1.02 lakh crore. EBITDA, or earnings before interest, taxes, depreciation, and amortization, increased by 177% to Rs 14,700 crore for the quarter.
According to P.B. Balaji, Group Chief Financial Officer of Tata Motors, “FY24 has started off on the right note with good performances across all automotive verticals. Each business is now producing consistent results and becoming structurally stronger thanks to the unique strategy it has adopted. We are still convinced that we can maintain this momentum for the remainder of the year and accomplish our stated objectives.
JLR’s sales increased by 57% to £6.9 billion on the strength of strong wholesales and a better mix, with earnings before interest and taxes (EBIT) margins of 8.6% (+1,300 basis points or bps) as a result. Due to the switch to BS6 Phase 2, commercial vehicle (CV) volumes were 15% lower than the previous year.
However, the demand-pull strategy and a healthier mix helped the EBIT margins increase to 6.5 percent (+370 bps). With revenue increase of 11.1 percent and an EBIT of 1.0 percent (+10 bps), the PV industry remained stable. Net profit was Rs 3,300 crore, while overall profit before tax (PBT) increased by Rs 10,300 crore to Rs 5,300 crore.
Also disclosed by Tata Motors was the fact that its free cash flow (automotive) for the June quarter was positive at Rs 2,500 crore, driven by a significant increase in cash profits. The company asserted that as a result, its net automotive debt was decreased to Rs 41,700 crore.
Earlier, Tata Motors disclosed that in Q1 FY24, its global wholesales numbers—which include JLR—rose 5% year over year (YoY) to 3,22,159 vehicles. Within that, PV sales increased by 8% year over year to 140,450 units.
For the third quarter, the company sold 10,324 and 82,929 JLR automobiles, respectively. Together, the high-end weapons sold 93,253 units, up 30% from the same quarter last year.
JLR CEO Adrian Mardell stated, “We have had a strong start to the financial year and delivered our highest production levels in nine quarters as well as our highest Q1 cash flow on record.”
The company’s profit above the Rs 2,546 crore average estimate of five brokers.
Despite short-term challenges, Tata Motors said it is still positive about the demand scenario and anticipates that moderate inflation would persist in the near future.
Thanks to a “healthy order book” and low breakeven in JLR, a steady increase in demand while pursuing a demand-pull strategy in CVs, a series of exciting launches ahead of the holiday season in PVs, and continued aggression in EVs, the domestic automaker said it aims to deliver a “strong performance” in the remaining months of the year as well.
On July 25, the Tata Motors share price closed 1.62 percent higher at Rs. 639.45 a share on the BSE.
