Tata Motors - Q3FY21 First Cut - ICICI Direct

(CMP: Rs. 263; MCap: Rs. 94,476 crore)

Tata Motors' (TML) reported stellar Q3FY21 results, with performance at both standalone and consolidated levels being above our estimates on all grounds. Consolidated margins came in at a near six-year high of 16.9% on the back of 15.8% margins clocked at JLR.

Q3FY21 Earnings Summary

Standalone

- Net revenues came in at Rs. 14,631 crore (up 35% YoY; I-Direct estimate Rs. 13,633 crore) tracking 18.8% YoY rise in volumes while blended realisations stood at Rs. 9.24 lakh/unit vs.our estimate of Rs. 8.62 lakh/unit. Standalone margins stood at 7.4% (vs. our estimate of 4.2%) while loss at PAT level stood at Rs. 638 crore, marginally lower than our loss estimate of Rs. 658 crore. Overall India business generated cash savings to the tune of Rs. 2,600 crore for the quarter, with FCF generation placed at Rs. 2,200 crore.

JLR

- Total JLR retail volumes were down ~9% YoY to 1.28 lakh units, with net sales stood at ~£6 billion, down ~6.5% YoY. EBITDA margins stood at 15.8% (our estimate 12.1%) - up 560 bps YoY. JLR reported PBT of £ 439 million (up 38% YoY). It generated a positive FCF of £ 562 million, with cost and cash savings from Project Charge+ for the quarter stood at £0.4 billion, taking total savings for 9MFY21 to £2.2 billion (FY21E target - £2.5 billion).

- The company informed that it is confident of delivering a strong EBIT performance in Q4FY21E as well as being FCF positive in that quarter.

Consolidated

- Consolidated net sales stood at Rs. 75,654 crore, up 5.5% YoY. Reported EBITDA margins stood at 16.9%, ahead of our estimates of 11.4% courtesy lower than expected gross margin deterioration and higher than expected savings in other expenses on percentage of sales basis. Consequent profit after tax stood at Rs. 2,941 crore as against our loss estimate of Rs. 64 crore.

- Tata Motors has allotted 23.13 lakh shares to promoter Tata Sons upon conversion of warrants at Rs. 150/share. This increases Tata Sons shareholding (based on voting rights) to 45.82%.

The company turned in numbers that were strong across all operational parameters, with savings in other expenses being a standout. Management commentary on sustainability of this performance along with pace of demand recovery is a key monitorable. We would be coming out with a detailed report soon.

Shares of TATA MOTORS LTD. was last trading in BSE at Rs.262.6 as compared to the previous close of Rs. 266.85. The total number of shares traded during the day was 10077046 in over 68317 trades.

The stock hit an intraday high of Rs. 278.85 and intraday low of 260.6. The net turnover during the day was Rs. 2729493914.

Source : Equity Bulls

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