Tata Motors’ Q4FY2021 revenue up 42 percent, in-line with estimates

Tata Motors’ India operations continued its strong sequential recovery in the last quarter of FY2021 and Jaguar Land Rover’s business too reflected retail recovery in China and North America in Q4. The consolidated net revenue for Q4 came in at Rs 88,628 crore, up 41.8 percent from the revenue of ₹75,654 crore in the year-ago period. The consolidated Q4 EBITDA came in at 14.4 percent, up 870 basis points YoY compared to FY2020.

However, the consolidated profit for the automobile major was impacted by the asset write-downs and restructuring costs with regards to JLR’s strategy, Reimagine amounting to Rs 14,994.30 crores.

JLR’s ‘Reimagine Strategy’
EBIT margin for JLR has grown to 7.5 percent in Q4 and 2.6 percent for the full year. Improving profitability is reflected in the recovering volumes, favourable mix and cost performance.

JLR has embarked on Reimagine strategy to with the objective of gaining leadership position in electrified luxury vehicles, sustainability and new automotive technologies to deliver a strong market performance, which it hopes to create long-term shareholder value.

Speaking on JLR’s performance, Thierry Bollore, Chief Executive Officer, Jaguar Land Rover said, “Despite the pandemic, this year has also seen significant positive change culminating in February with the launch of our Reimagine strategy focused on reimagining our iconic British brands. Although it is still early days, we have made significant progress in implementing it. Jaguar Land Rover is well placed to emerge from the pandemic as a stronger and more resilient company that is able to navigate and capitalise on the opportunities ahead.”

For FY2022, Jaguar Land Rover expects sales to continue to recover. The company is still targeting an EBIT margin of at least 4 percent and break-even free cash flow.

India operations see sequential recovery
India operations continued its strong sequential recovery in Q4 FY2021 with CV revenues recovering to pre-pandemic levels and PV revenues hitting multi-year highs on the back of the ‘New Forever’ portfolio . The business achieved three percent EBIT margin and delivered strong free cash flows of 2900 crore in Q4. In fact the passenger vehicle absolute EBITDA is the highest in last 10 years and led to cash savings of 9300 crore against a target of 6000 crore.

Guenter Butschek, CEO and MD, Tata Motors, said, “At Tata Motors, we scaled up capacity by prudently addressing several supply chain bottlenecks while maintaining the health, safety and wellbeing of our employees as well as the supporting ecosystem at the forefront. A clear shift towards personal mobility and the rich preference for our ‘New Forever’ range of cars and SUVs led to the PV business recording its highest ever annual sales in 8 years and growing its market share to 8.2%. The CV business consistently posted sequential quarter on quarter growth on back of improved consumer sentiments, buoyancy in e-business, firming freight rates and higher infrastructure demand including road construction and mining. We have successfully improved our operational and financial performance by reducing costs, generating free cash flows and providing ‘best in class’ customer experience.”

The business scenario remains fluid for the automaker with second wave of the pandemic hitting the country resulting in multiple lockdowns. This is also expected to have a temporary adverse impact on the demand and supply situation. Consequently, the first half of the year is expected to be relatively weak. Sequential improvement in overall performance is expected from the second quarter of FY2022.

In the commercial vehicles segment, the company continues to focus on growing market share and protecting margins.

FY2022 outlook
At an investor call after the announcement of the Q4 FY2021 results, Tata Motors reiterated commitment to consistent, competitive, cash accretive growth and deleverage the business. Supply bottlenecks, disruptions and commodity prices continue to be the key areas of concern and expect adverse impact of the lockdown in Q1FY2022.