Tata Motors Q4 preview: Auto major expected to report a healthy performance driven by India, JLR business

Tata Motors is expected to report healthy numbers for the quarter ended March on Friday, led by margin expansion across divisions and also strong India and tracking a recovery in wholesale volumes at JLR.

The company is expected to report a net profit anywhere between ₹3,100-3,200 crore, according to an average estimate of brokerages.

Tata Motors has reported volume growth of 3 per cent during the fourth quarter, led by the passenger vehicles (PV) segment. JLR volumes rose 24 per cent in the same period as chip supply continued to recover coupled with traction toward new models.

Here's what brokerages are expecting:

Prabhudas Lilladhar

The brokerage expects Tata Motors to report revenue growth of 23 per cent aided by healthy performance across segments.

“We expect a revenue growth of c23% helped by strong volumes and higher ASP across segments (JLR, CV and PV). Volume ramp-up at JLR is expected to help revenues, profitability and drive FCF generation aided by strong order book. Overall volume has grown by c28% QoQ and EBITDA margin is at c11.6% (+74bps QoQ),” said the brokerage.

Motilal Oswal

According to the brokerage, India business performance remains healthy, led by strong growth in PVs and CVs in 4Q. While, JLR volumes are expected to grow YoY due to easing chip shortages.

“We estimate an EBIT margin of 5.3% for JLR in 4QFY23, supported by mix, softening RM costs and cost control,” it said.

“EBIT margin for CV likely to expand 210 bps QoQ to 8.1% driven by operating leverage, while it is likely to contract by 20 bpS QoQ to 1.5% for PVs,” it added.

Emkay

Tata Motors is likely to register a 37% consolidated revenue growth, driven by strong growth across JLR (+53%), CVs (+18%) and PVs (+7%). The brokerage expects the consolidated EBITDA margin would expand by 140bps, led by higher production in JLR and supported by a strong margin performance in CVs.

“JLR’s GBP revenue expected to grow by 53% YoY to GBP7.3bn, owing to higher volumes (+24%) and realizations (+24%). EBITDA margin to expand by 100bps to 13.6% due to better scale,” said Emkay in  its report.

 “India CV revenue to grow by 18% YoY to Rs205bn, driven by higher realizations (+22%). Realization to improve due to higher MHCV share (47% vs 40%) and price hikes. EBITDA margin to expand by 440bps to 10.8% due to price hike and scale. India PV revenue to grow by 7% to Rs113bn, driven by higher volumes (+9%). EBITDA margin to contract by 80bps to 6.1%,” it added.

ICICI Direct

Brokerage ICICI Direct  is expected to report a healthy performance in Q4FY23 primarily tracking a recovery in wholesale volumes at JLR.

"Total sales volume at Indian operations was at 2.52 lakh units, up 10.4% QoQ with JLR sales volume (including China JV) anticipated at 1.08 lakh units, up 16.6% QoQ. On a consolidated basis for Q4FY23, we expect TML to report net sales of ₹1.06 lakh crore, up 20% QoQ. EBITDA in Q4FY23 is expected at ₹13,664 crore with corresponding EBITDA margins at 12.9%. JLR’s EBITDA margins are expected at 13.5% in Q4FY23. At the PAT level, we expect the company to report profit of ₹2,269 crore in Q4FY23.

On Thursday, the company's share ended 0.43 per cent up at ₹511.65 on BSE.