A strong operational performance by Jaguar Land Rover Automotive and India business helped Tata Motors crimp the consolidated losses in the March quarter. The Tata Group flagship reported a net loss of Rs 7,605 crore against a net loss of Rs 9,894 crore in the corresponding quarter, the company said on Tuesday. The losses were lower than Street estimates.
The losses came on back of asset write-downs and restructuring costs Rs 14,994.30 crore with respect to new JLR’s Re-imagine strategy. Company’s passenger vehicle business’ earnings before interest tax, depreciation and amortisation (Ebitda) were the highest in a decade.
The consolidated earnings for the March quarter were dragged down by an exceptional loss at the company’s UK subsidiary posted on account of impairment, the company said on Tuesday. The Tata Group flagship reported a net loss of Rs 7,605 crore against a net loss of Rs 9,894 crore a year ago.
Though on a low base, consolidated revenue from operations during the quarter, rose by 41.8 per cent year-on-year to Rs 88,627.9 crore in Q4FY21. The sequential increase of 17.1 in topline met Street estimates.
“It was a quarter that saw a strong resilient all-round performance despite the pandemic,” PB Balaji, chief financial officer, Tata Motors told reporters in a post earnings call. He said the demand for JLR continues to improve as more percent of populations get vaccinated and normalcy returns to most of its key markets including the US, UK and Europe. JLR reported pre-tax profits of £534 million in Q4 and £662 million for the full year before exceptional charges.
Balaji flagged supply disruptions and commodity inflation as the key concerns. “The current quarter is likely to be adversely impacted by lockdowns, semiconductor shortage and steel inflation,” said Balaji. The performance in the current year is set to get better progressively as supply chain and Covid situation improves, he added.
Led by a strong recovery in China where sales soared 127 per cent JLR retailed 123,483 vehicles in the three months to March, up 12.4 per cent year-on-year. Full year retails of 439,588 vehicles were still down 13.6 per cent, although sales in China increased 23.4 per cent year-on-year.
During the quarter JLR took an exceptional charge of £1.5 billion, including the £952 million of non-cash write-downs. It invested £2,343 million in FY21 and plans to spend similar amounts in FY22. The Project ‘Charge+’ delivered £2.5 billion in FY21 & and lifetime of £6 billion, said Balaji.
“While we believe lower capex and government’s stimulus would support JLR, improving PV business and focusing on cost control would improve the company’s standalone margin.
Moreover, tight control on capex and R&D would lower its automotive debt to greater extent over the next 2-3 years,” said Mitul Shah, head of research at Reliance Securities.
In view of the ongoing revival of JLR’s global business and restructuring of domestic business coupled with attractive valuation, Reliance maintains a positive view on the stock, and we have BUY rating on the company with a two-year target price of Rs 250.
Meanwhile the India business including joint operations reported a net profit at Rs 1,645.69 crore in Q4FY21 against loss of Rs 4,871.05 crore in the year-ago quarter, while revenue jumped 106 percent jump year-on-year growth to Rs 20,045.9 crore during the quarter, driven by strong passenger vehicle demand and recovery in commercial vehicle demand. The standalone entity which took impairment for the PV business and onerous contract provision of Rs 2000 crore reversed this quarter on the back of significant improvement in performance of the PV business. The PV business’ EBITDA at 4.9 per cent for the fourth quarter and absolute EBITDA were the highest in the last 10 years.