Home / Markets / Mark To Market /  Tata Motors’ JLR business is yet to gather steam, show Q1FY23 sales numbers

Tata Motors Ltd’s UK-based subsidiary, Jaguar Land Rover Automation PLC, continues to be plagued by semiconductor shortages.

On the demand side, the Jaguar Land Rover (JLR) business is seeing a cyclical recovery evident from the sequential growth in the order book by 32,000 units to 200,000 units at the end of the first quarter of the financial year 2023 (Q1FY23).

However, the supply-side constraints are likely to delay the road to recovery. As such, analysts at Motilal Oswal Financial Services do not see near-term catalysts for the JLR business, which accounts for roughly 40% of Tata Motors’ sum-of-the-parts valuation for FY24.

Besides the chip shortage, Q1FY23 sales volumes were impacted by the China lockdown. Also, the phase-out of Range Rover Sport weighed on volumes.

The Q1 retail sales volumes at 78,825 units remained flat sequentially with volume growth in UK and Europe being offset by a decline seen in China, North America and the rest of the world.

But on a year-on-year basis, retail sales volumes dropped by 37% with all regions reporting a decline.

Wholesale volumes including the China joint venture dipped by 15% year-on-year and 7% sequentially to 82,587 units. “While Q1FY23 wholesale volumes are slightly better than our estimate, the product mix seems to be much better, diluting the impact of operating deleverage," said analysts at Motilal Oswal in a report on 8 July.

Meanwhile, Tata Motors’ commercial vehicle and passenger vehicle business are seeing strong momentum. In June, commercial vehicle and passenger vehicle wholesale volumes rose sequentially by about 14% and 4% respectively. However, Q1FY23 commercial vehicle volumes declined by 16% sequentially while passenger vehicle volumes rose by about 6%.

Shares of the automaker are up by 43% in the past year, ahead of the nearly 17% increase seen in sectoral index, Nifty Auto in the same span.

ABOUT THE AUTHOR

Vineetha Sampath

Vineetha Sampath is a chartered accountant and is experienced in the field of research analysis. She joined Mint's Mark to Market team recently and this is her first stint in journalism.
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