Tata Motors Q4 results: Auto giant beats estimates, consolidated PAT rises to ₹5,408 cr, revenue up 35%. Details here

Auto giant, Tata Motors surpassed estimates in consolidated net profit to ₹5,407.79 crore in the fourth quarter of FY23, against a net loss of ₹1,032.84 crore in the same quarter a year ago. Sequentially, the Q4FY23 PAT saw a growth of nearly 83%. The company's top-line front came in strong with an upside of over 35% YoY in revenue. Furthermore, the Tata Group-backed firm has announced a dividend for FY23. 

On a consolidated basis, revenue from operations stood at ₹1,05,932.35 crore in Q4FY23, as compared to ₹78,439.06 crore in Q4 of previous fiscal. In December 2022 quarter, the revenue was at ₹88,488.59 crore.

According to Tata Motors, volumes continued to improve on strong India demand and better supplies at JLR. Pricing actions and a richer mix led to improved ASPs and higher revenue growth. Easing inflation, better mix, pricing actions, and favorable operating leverage resulted in strong improvements in margins and profits."

Overall, in FY23, the business recorded an all-time high revenue of ₹ 346.0K crore and an EBITDA ₹37.0K crore, and PBT (bei) of ₹1.5K crore. The India business net debt was the lowest in 15 years at ₹6.2K crore.

Talking about the financial performance, PB Balaji, Group Chief Financial Officer, Tata Motors said, "The year ended on a strong note with all automotive verticals delivering robust performances leading to multiple all-time high achievements. The distinct strategy employed by each business is delivering, in unison, leading to a sharp improvement in overall results."

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Coming to shareholders, the auto player had good news for them. Tata Motors' board of directors on Friday recommended a final dividend of ₹2 per Ordinary Share (100% of Face Value) and ₹2.1 per share for DVR shareholders subject to approval by the shareholders at the AGM.

Jaguar Land Rover's Q4 performance:

In the case of its brand Jaguar Land Rover (JLR), the luxury carmaker posted revenues of £7.1 billion, up 49% (y-o-y) in Q4FY23, profit before tax, and exceptional items of £368 million. Also, JLR's Q4 EBIT margin was at 6.5%.

Further, JLR's wholesales in Q4 were at 94,649 units, up 24% YoY. Meanwhile, the order book stood at 200K units -- remaining strong despite increased retail sales. Range Rover, Range Rover Sport, and Defender represent 76% of the book.

As of March 31, 2023, JLR's net debt improved to £3.0 billion -- with cash of £3.8 billion and liquidity of £5.3 billion (including undrawn £1.52 billion revolving credit facility).

Read here: HPCL Q4 results: Standalone PAT driven to nine-year high of ₹3,223 cr by strong sales; key highlights here

Outlook ahead:

On JLR, Adrian Mardell, Jaguar Land Rover’s Interim Chief Executive Officer, said, "With the collective strength of our people, we will continue to deliver our Reimagine strategy. Demand for our exceptional modern luxury vehicles remains strong and with a pipeline of ultra-desirable electrified models on the horizon, I am excited and confident for our future."

Going ahead, JLR expects gradual improvements in chip supply to continue during the next fiscal year. While supply challenges and macro risks remain, the carmaker is targeting to grow wholesales through the year and achieve EBIT margins of over 6% in FY24.

Investment spending is expected to increase to about £3 billion at JLR in FY24, but free cash flow is expected to be >£2 billion and net debt is expected to reduce to <£1 billion by FY24.

Tata Motors, which is the parent company of JLR, remains optimistic on the demand situation despite near term uncertainties and expect a moderate inflationary environment in the near term. It aims to further improve and deliver a strong performance in FY24.

"The momentum is expected to build through the year factoring in seasonality, stabilization of JLR supply chain and post RDE impact in India," Tata Motors said.

Read here: Cipla Q4 results: Consolidated PAT at ₹526 cr, healthy growth in India and US drives revenue; key highlights here

Should you buy Tata Motors share price after Q4?

On the financial performance, Rohan Mehta- Founder and Portfolio Manager at Turtle Wealth- A SEBI registered PMS said, "Tata Motors has managed to again surprise the market by posting a profit of 5407 cr. above the street’s expectations. FY23 was a good year for the company driven by multiple new product launches, infra push by the government, a strong demand environment & positive recovery of the CV passenger set. This has led the co. to end India business net debt at the lowest levels in 15 years along with all-time high revenue, PAT & EBITDA. This has aided the company to declare dividends for the first time since 2016."

Mehta added, "JLR also has delivered a good set of numbers-driven by improvement in chip supply. Co. is hopeful of further improvement in the chip supply & demand environment. We are watchful that the current growth sustains and only goes north in the coming quarters."

Meanwhile, Himanshu Singh – Research Analyst, Prabhudas Lilladher said, "Revenue was slightly lower than our estimate while above street estimate. EBITDA margins were largely in line with our and street estimate. Depreciation was higher than expected while PAT gained from deferred tax benefit. Overall, good set of numbers as per expectation."

Thereby, Singh has given a 'Buy' recommendation on Tata Motors stock price for a target price of ₹590.