Tata Motors Ltd. Result update for Q1FY19


Tata Motors is among the world’s leading manufacturers of automobiles. Tata Motors is a $45 billion organization. It is India’s largest and the solely Original Equipment Manufacturer (OEM) offering a pervasive range of integrated, smart and e-mobility solutions. Its diverse portfolio includes pervasive range of cars, sports utility vehicles, trucks, buses and defense vehicles.

Financial Analysis:

1.    Turnover 2.0 started with a strong note which upsurges the revenue by 14.4% to Rs.670.81 billion in Q1FY19 from Rs.586.51 billion in Q1FY18. The launch of Turnover 2.0 strategy to Win Decisively in CV, and Win Sustainably in PV further strengthens their execution capabilities. The standalone revenue of Tata motors was up at 83%.

2.    The impact caused by the change in China’s customs duty led EBDITA to diminish to 10.91% at Rs.44,234 mm in Q1FY19 from Rs.49,648.3 mm in Q1FY18. EBDITA margin stood at 6.2% in Q1FY19 lower than 7.9% in Q1FY18.

3.    Due to the China duty change, destocking and FX revaluation loss PBT saw a sharp drop of 169.15% to Rs. 25,842.3 mm in the quarter ended June 2018 compared to Rs. 37,369.9 mm in the quarter ended June 2017.

4.    PAT plunged 159.78% at Rs.19023.7 mm in the quarter ended June 2018 from Rs.31,822.6 mm in the quarter ended June 2017. The deterioration in PAT is mainly due to the lower profitability in the JLR’s China JV (CJLR) caused by the customs duty impact.

5.    Net debt faced a sharp drop of Rs.624.36 billion on 30th June 2018 compared to Rs.399.77 billion on 31st March 2018, indicating a negative free cash flow at both Tata Motors and JLR with continued high investment. Net automotive debt stood at Rs.329.77 billion in Q1FY19 against Rs. 138.89 billion in Q4FY18

6.    In this quarter, the free cash flow showed a negative growth of Rs.181.109 billion indicating lower operating profits at JLR and unfavourable working capital in Tata Motors and JLR.

7.    The financial cost surged by Rs.2,660 mm to Rs.13,750 mm during Q1FY19. the primary reason for the increment in the cost is due to the higher borrowing in JLR.

8.    In Q1FY19, the wholesale grew 59% to 1,76,868 units with broad-based growth across the entire portfolio on a low base. In the domestic market M&HCV truck grew 111%, ILCV trucks +73%, SCV and pickups +57%, CV passenger +31% and PV was up by 50%. The growth in CV was led by the launch of new products, higher economic activity and improved industrial activity, robust the demand for private consumption and government spending on infrastructure.

Company’s Future plan:

1.     Tata Motors has decided to revamp the business model in Thailand.

2.    JLR is planning for 4-7% EBIT between FY19-21 and 7-9% over the long future. Tata motors anticipate for 3-5% EBIT between FY19-21 and 5-7% over the long term.

3.    The Company is investing in architectures to enable them to meet the electrification trends. Tata motors further anticipate that from 2020, all of their new models will be coming with one or other form of electrification option.

4.    Tata motor plans launching their new manufacturing facility in Slovakia that will enable them to design the facility for efficiency and for quality and will further enable them to drive cost reductions for the vehicles that will be built in Slovakia




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