Auto major Tata Motors is set to announce its December quarter results of FY21 (Q3FY21) on Friday, and analysts, largely, expect the company’s top as well as bottom-line to grow, with cost-reduction and better mix aiding JLR’s performance while losses may narrow for the standalone business. On a consolidated basis, the company had reported revenue and profit of Rs 71,676.1 crore and Rs 1,574.5 crore, respectively, in the year-ago quarter.
According to the monthly sales data, Tata Motors sold 1.5 lakh units in the domestic markets, up 24 per cent on a year-on-year (YoY) basis, while sequentially, volumes grew 41 per cent. In Q3FY21, the company sold 68,803 passenger vehicles (PV), up 89 per cent YoY, and 82,155 commercial vehicles (CV), down 3 per cent YoY.
Meanwhile, JLR had released, earlier this month, its sales figure for the December quarter, in which retail sales were at 1.28 lakh vehicles, 13.1 per cent higher than the 1.13 lakh vehicles sold in the preceding quarter, but down 9 per cent on the same period last year. China sales were particularly encouraging, up 20.2 per cent on the prior quarter and 19.1 per cent YoY.
At the bourses, Tata Motors’ stock rallied 38.3 per cent during Q3FY21 as compared to the benchmark Nifty50 index’s 24 per cent gain in the same period, ACE Equity data show.
Here’s what top brokerages expect from Tata Motors’ Q3FY21 results:
On a consolidated basis, Nomura expects Tata Motors’ revenue to grow 9 per cent YoY to Rs 77,999.3 crore. The brokerage also sees the company’s profit after tax (PAT) growing 48 per cent YoY to Rs 2,631.9 crore. Earnings before interest, tax, depreciation, and ammortisation (Ebitda) may grow 49 per cent YoY to 10,951.5 crore while margin is seen at 14 per cent for the quarter under review.
The brokerage also sees sequential improvement across domestic and JLR businesses, with Tata Motors expected to clock 36 per cent YoY growth in standalone revenue at Rs 14,628.2 crore. The loss is seen contracting to Rs 342.3 crore from Rs 1,201.3 crore in the year-ago quarter, while Ebitda may surge to Rs 905.6 crore.
“For JLR, we expect a better mix for the quarter. Ebitda margin would be up sequentially to 14.3 per cent driven by strong Range Rover, Range Rover Sport mix. The company could also reverse up to GBP 90 million of provisions for emission-related fines. For standalone, we expect around 36 per cent YoY revenue growth driven by 22 per cent growth in overall volumes. Ebitda margin should be up 510 bps QoQ to 6.2 per cent on operating leverage benefit and cost control,” the brokerage said.
Kotak Institutional Equities
Analysts at Kotak Institutional Equities believe Tata Motors’ standalone revenues may increase by 27 per cent YoY to Rs 13,719.5 crore, led by 22 per cent YoY increase in volumes across segments and 3 per cent YoY increase in average selling prices (ASPs) on account of price increase due to BS-VI transition partly, offset by higher mix of PV segment in Q3FY21. The brokerage builds in standalone Ebitda margin of 4.8 per cent, up 530 bps YoY, led by operating leverage benefits and cost cutting initiatives in the quarter.
As for JLR, “we expect revenues (ex China JV) to increase by 11 per cent YoY, to 7,224 million pounds led by 20 per cent YoY increase in ASPs in Q3FY21. We expect reported Ebitda margin to increase by 520 bps YoY to 15.7 per cent due to cost-cutting initiatives,” the brokerage said.
On a consolidated basis, the brokerage is building a 22.5 per cent YoY growth in Tata Motors’ revenue at Rs 87,816.6 crore while net profit is seen rising 189.2 per cent YoY to Rs 4,552.7 crore. Ebitda may come in at Rs 12,881.8 crore while margin is seen at 14.7 per cent for the quarter under review.
The brokerage expects Tata Motors’ India business losses to reduce due to demand recovery in commercial vehicles (CV) and strong PV demand. Although, India business have had an adverse mix, with CV contribution to revenue at around 56 per cent against 72 per cent on a YoY basis, it said.
“On the JLR front, mix improvement is expected to continue with higher share of Land Rover and China, while cost-cutting should aid performance,” the brokerage said.
On a consolidated basis, analysts at Motilal Oswal are building a flat revenue for Tata Motors on year-on-year (YoY) basis, down 0.3 per cent, at Rs 71,439.9 crore; although, the same would be up 33.5 per cent, sequentially. The bottom line, meanwhile, may come in at Rs 76.8 crore, it said. Ebitda is seen sliding 2.8 per cent YoY to Rs 6,995.1 crore while Ebitda margin may come in at 9.8 per cent as compared to 10 per cent in Q3FY20.
Analysts at HDFC Securities believe that on a standalone basis, Tata Motors’ volume growth should help revenues to rise by 47 per cent YoY to Rs 14,240 crore. The bottom line, meanwhile, may reflect a loss of Rs 630 crore for the quarter under review. Ebitda margin may come in at 5.1 per cent, up 370 basis points YoY.
“We expect JLR to report an Ebitda margin at 11 per cent vs 10.8 per cent in Q3FY20. Consolidated margins may come in at 11.3 per cent (vs 11.4 per cent QoQ/YoY). Besides, India business outlook, market share gains in the PV segment, recovery trends in the CV segment, and for JLR, demand recovery trends and impact of Brexit on manufacturing remain the key monitorables,” the brokerage said.