Tata Motors Q4: Loss narrows to ₹1,033 cr; revenue down 11%

Posting losses for the fifth straight quarter, auto giant Tata Motors on Thursday reported a net loss of ₹1,033 crore in the January-March period compared with a ₹7,605 crore loss during the same period last year. The company has been able to narrow its losses this time from ₹1,516.14 crore during the preceding quarter.

Tata Motors' revenue also fell 11% to ₹78,439 crore during the said quarter versus ₹88,627.90 crore during a year-ago period. The company's EBITDA (earnings before interest, taxes, depreciation and amortisation) declined 320 bps to 11.2%, while the EBIT margin contracted 410 bps to 3.2%.

Tata Motors, however, says the demand remains strong despite geopolitical and inflation concerns. "The supply situation is gradually improving, whereas commodity inflation is likely to remain at elevated levels."

The company is expecting performance to improve through the year as the COVID in China and semiconductor supplies are expected to improve. It also aims to deliver strong EBIT improvement and free cash flows in FY 23 to get to near net auto debt-free by FY 2024.

During Q4, Tata Motors marked an exceptional charge of £43m in the fourth quarter relating to its business in Russia. New vehicle sales into Russia were paused in February. "During the year ended March 31, 2022, Jaguar Land Rover has created a provision of crores ₹428.66 (£43.00 million) in relation to customer liabilities arising from sanctions imposed against Russia by many countries, preventing the shipment of vehicles and certain parts to the market," says the company in its stock exchange filing.

Shailesh Chandra, MD, Tata Motors and Tata Passenger Electric Mobility Ltd, says going forward, the demand for its ‘New Forever’ range remains strong even as the semi-conductor situation and supply-side challenges remain uncertain.

"In a challenging year disrupted by Covid, semi-conductor crisis and steep increase in commodity prices, Tata Motors posted its highest ever annual, quarterly and monthly sales in March 2022 and introduced new nameplates and aspirational variants to improve market share," he says. The company also operationalised 2 subsidiaries - Tata Motors Passenger Vehicles Ltd and Tata Passenger Electric Mobility Limited - during the quarter.

Tata Motors-owned Jaguar Land Rover (JPR) reported a 27.7% fall in its revenue at £4.8 billion as compared to the same quarter the previous year. The revenue in Q4 FY22 was up 1% from Q3 FY22.

Wholesales (excluding the China joint venture) in Q4 FY22 were 76,526 units, up 11% on Q3 FY22 with higher production volumes. Retail sales in Q4 were 79,008 vehicles, down 1% from Q3 FY22 as a consequence of constrained wholesales and low dealer inventories. Wholesales for the full year FY22 were 294,182, down 15% compared to FY21. Retail sales for FY22 were 376,381, down 14% compared to FY21.

The company expects the global semiconductor shortage to continue through the next fiscal year with gradual improvement. "The Covid lockdowns in China, as well as the new Range Rover Sport model changeover, are expected to limit volume improvements in Q1 possibly resulting in negative EBIT and negative free cash flows in the quarter," says the auto major.

The company's medium and longer-term financial targets remain unchanged, including improving EBIT margins to 10% or more by FY26 and improving cash flow to achieve near-zero net debt in FY24, says the company.

Meanwhile, Tata Motors stock closed 4.19% or 16.25 points down to ₹371.9 on the NSE. The stock has fallen over 9.34% in the past five days amid global negative sentiments. The stock has dropped 13.72% in the past month.