TaMo To Pay 1st Dividend Since 16

The company had incurred a net loss of ₹1,032 crore in the year-earlier quarter.

A confluence of improving market conditions, easing of supply-side challenges for JLR and a focussed-cost reduction programme has yielded a second consecutive quarter of profit for Tata Motors in FY23, reversing the company’s streak of losses for the last two years before the December quarter.

Better-than-expected vehicle sales at JLR on the back of easing chip shortages and robust demand, and a focus on profitable market share growth in the Indian commercial and passenger vehicle businesses lifted revenue 35% to ₹1.05 trillion for the quarter, the highest for Tata Motors in a quarter. It also saw Ebitda margins hit a quarterly record at ₹14,100 crore, an increase of 210 basis points over a year earlier.

Tata Motors also cleared a significant portion of its net automotive debt at ₹13,100 crore in the quarter, with the company’s net automotive debt in India at its lowest levels in 15 years at ₹6.2 crore. However, P.B. Balaji, Group chief financial officer, Tata Motors said in an interview that the automaker won’t be able to achieve its target of becoming net automotive debt zero by fiscal year 2024, though he is “reasonably confident" the business will achieve that target by FY25.

“In terms of net automotive debt, our intention is to keep reducing that further and further as we go and this year, we will get as close to net debt-zero as possible. For JLR, from the current nearly 3 billion pounds of debt that we have, we are guiding for getting it down to roughly about a billion pounds or ₹10,000 crores; we have Singapore debt of another ₹9,000 crore. So, we will not hit the FY24 goal of going net debt-free but it is a matter of a few quarters after that," Balaji said.

“Debt reduction as I’ve always been saying is mainly from free cash flow for the business and we have proven again that we are able to do it with quarter being a case in point. Then there is monetization of non-core investments, the Tata Technology DRHP has already been filed and we are waiting for approval, once we get the approval subject to market conditions we do the monetization of this non-core investment which will enable us to clear out our debt. But we will not be able to hit that in FY24, but we are reasonably confident of going net cash actually in FY25. The final option, if nothing else works is we’ll want to look at any strategic fundraising we need to do like what we did with TPG on the EV side. But we’re not looking at that at the moment. We are focused on executing our strategy well this year", Balaji added.

Addressing concerns around market share loss in the commercial vehicle business, Balaji said that Tata Motors focus on improving realizations in the CV business will continue, but volumes should also continue to improve month-on-month. While Tata Motors has gained month-on-month market share since H2HY23, it has consistently reported year-on-year market share loss for the last 6 months. CV volumes for Tata Motors were down 28% in April.

“Advance buying in Q4 FY23 in anticipation of price hikes post BS VI Phase II will have near term impact on demand. With the government’s continuing thrust on infrastructure development, we remain optimistic about the overall CV demand in FY24 despite near term challengers on interest rates, fuel prices and inflation. We will continue to drive our demand-pull strategy and drive customer preference through innovation, service quality and thematic brand activation. We will aim for higher realizations and cost savings to secure double-digit EBITDA margins for FY24 and improve the performance of all business verticals", the company said in a statement.