Tata Motors Q3 net profit turns around to Rs 2,958 crore

It has been a smart turnaround for the Tata Motors numbers in Q3FY23. The company posted consolidated net profits of Rs2,958 crore for the third quarter, a stark contrast to the Rs1,516 net loss posted in the year ago quarter and the loss of Rs945 crore in the sequential quarter. A gradual recovery in demand from China and Europe resulted in, Jaguar Land Rover, reporting 22.5% higher revenues from operations at Rs88,489 crore.

Tata Motors reported consolidated operating profit (EBITDA) up 11% yoy at Rs9,900 crore while the EBITDA margins expanded by 90 bps to 11.1%. The net profits for the quarter were more than 10 times the consensus estimates for profits for the quarter. For Q3FY23, the revenues of JLR were up 28% yoy and 15% on a sequential basis on smoother supplies, strong model mix tweak and pricing. Higher profits came from higher wholesale volumes, pricing edge and foreign exchange offset. However, inflation and growth concerns remain.

The commercial vehicles business of Tata Motors reported 22.5% growth in Q3FY23 at Rs16,900 crore while the revenues of Tata Commercial Vehicles (CV) in the third quarter were up 22.5%. The quarter saw  better semiconductor supplies and stable commodity prices. This could continue into the fourth quarter. For Q4FY23, positive cash delivery will be the major advantage.

The turnaround is interesting as it comes after 7 consecutive quarters of losses. There are several interesting shifts overall. Firstly, the chip shortage is tapering. Secondly, JLR demand is picking up as China is finally looking to bounce back economically after the COVID restrictions. Finally, domestic business has also looked up.

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