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Tata Motors may see improvement in consolidated revenue, operating profit in Q3

Photo: ReutersPremium
Photo: Reuters

  • Swift turnaround in the passenger vehicle business in India and gradual improvement in demand for commercial vehicles is likely to reduce losses of the India (standalone) business
  • Sales of Jaguar Land Rover has been improving on a sequential basis after recovery in demand in China and other important markets like US and European countries

Tata Motors Ltd – the vehicle manufacturing arm of conglomerate Tata Sons – is expected to post double digit growth in consolidated revenues and operating profit for the December quarter on the back of improvement in sales of Jaguar Land Rover in major markets like China.

Swift turnaround in the passenger vehicle business in India and gradual improvement in demand for commercial vehicles is also likely to reduce losses of the India (standalone) business.

According to brokerage firm, Emkay Global, the New Delhi based carmaker is likely report a 92% year-on-year increase in net profit to 2957.2 crore as result of 20% jump in net sales to 86364.3 crore. The operating profit or the earnings before interest, tax, depreciation and amortisation (EBITDA) is expected to improve by 49% to 10743.7 crore and the operating margins are also likely to expand by 240 basis points to 12.4% as result of better sales, product mix and cost cutting methods adopted by the company.

“TTMT (consolidated) is likely to post revenue/EBITDA growth of 20%/49%, due to the improvement in JLR and standalone operations. Healthy volumes and cost controls are expected to support margin expansion," said analysts of Emkay Global in a note.

Sales of Jaguar Land Rover has been improving on a sequential basis as result of a swift recovery in demand in China and other important markets like United States and European countries. Demand though might come under pressure in the coming months since most of the western European countries have imposed tough lockdown measures to contain the spread of Covid -19 from December onwards.

In the standalone business, sales of Tata Motors’ passenger vehicle have been on the rise on the back of a gradual recovery in the economy, increased preference for personal vehicles and new product launches like Altroz (a premium hatchback) and the upcoming Safari (a SUV). Sales of the company’s commercial vehicles are also expected to improve going forward as pick up in infrastructure development gathers pace.

“India business losses to reduce due to demand recovery in CVs and strong PV demand. JLR mix improvement to continue with higher share of Land Rover and China, and cost-cutting measures to aid performance. FY22E earnings per share upgrade driven by India volume upgrade for CVs and PVs," added analysts of Motilal Oswal Institutional Equities in note.

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