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On Monday, 1st November, 2021, automobile giant Tata Motors published its quarterly results for the second quarter of FY 2021-22. The consolidated results, i.e., results including the financials of Jaguar Land Rover and Tata Motors reported a loss of Rs. 4,415.54 crores. Compared on a yearly basis, the losses have widened a staggering 1337%. Tata Motors had reported Rs.307.26 crores loss in Q2 FY21. Noteworthy among the contributors is that in this quarter, the profit from joint ventures and associates stood at Rs.61 crores, a 69% YoY jump from the Rs.36 crores in the year-ago period.

Even as demand for passenger vehicles saw a rise in the quarter under review, supply shortages and the increase in input costs that has gripped the manufacturing sector, affected the production cycle for Tata Motors. JLR sales, in particular, was severely hampered, by about 25% sequentially, on account of the global chip shortage. Notably, JLR contributes about 80% of Tata Motor’s revenue.

The consolidated revenue, nonetheless, increased 14.67% YoY to stand at Rs.61,378.82 crores compared to Rs.53,530 crores in Q2 FY21. India’s third-largest carmaker had dispatched nearly 50% more vehicles sequentially at 1.62 lakh units in Q2 FY22. 

The operating profit margin however reduced by 210 bps in the second quarter and stood at 8.4%. 

On Monday, after the market closed, the shares of Tata Motors stood at Rs.485.70 after gaining 0.41% intraday. The last dividend that the company declared was on 30th May 2016 when a dividend of Rs.0.20 per share was declared as the final dividend.

Hits 

  • 14.67% YoY jump in the consolidated revenue , from Rs.53,530 crores to Rs.61,378.82 crores
  • 50% YoY improvement in the diluted loss per share for shareholders, from Rs.23.23/share to Rs.11.60/share
  • 69% YoY increase in the net profit from joint ventures and associates 

Misses

  • 1337% YoY increase in the net loss of the company, from Rs.307.26 crores to Rs.4415.54 crores
  • 323% increase in the consolidated EBITDA loss. The loss increased from Rs.815 crores last year to Rs.3467 crores this year
  • Operating profit margin reduced by 210 basis points and stood at 8.4% in the quarter under review

Segment-wise performance 

  • Jaguar Land Rover –
  • 12.8% YoY fall in the wholesale segment due to shortage of chip supply
  • The free cash outflow was recorded at GBP664 million
  • Strong demand with an order of 125K units recorded
  • Pre-tax loss was reported at GBP 302 million
  • A liquidity of GBP 5.9 billion as on 30th September 2021. This liquid reserve comprises of GBP 3.8 billion in cash and GBP 2 billion in undrawn revolving credit facility.
  • Tata Motors –
  • Quarterly revenue increased by 91% and EBITDA increased by 130 bps to 3.1%. However, the issue of supply chain and commodity inflation impacted the recovery
  • Wholesales increased to 171,823 units which also includes exports
  • Pre-tax loss was reported at Rs.819 crores
  • Compared to a Rs.7.1 crore fall in the last quarter, the working capital improved by Rs.3.8 crores
  • Continued growth in EV sales as 2704 units were recorded sold in the July-September 2021 quarter
  • Liquidity position, as on 30th September 2021, was recorded at Rs.6.8 thousand crores

Management commentary

The company said that its Indian operations have improved considerably over this one year period. However, the recovery has been impacted due to commodity inflation and supply chain problems. JLR stated that the new Range Rover sales, expected from Q4 of the financial year 2021-22 is anticipated to bring in fresh revenue and profits for the company.

JLR’s CEO Thierry Bollore said that with a strong demand from customers and a record order book, the company is well-placed to return to a good performance as the supply of semi-conducted starts improving. He also said that JLR continues to use its reimagine strategy to realise the business’s full potential and to create the next generation of the best luxury vehicles for the discerning customers.

Tata Motors said that JLR is trying to increase the future visibility and control over the supply of semiconductors as it is working closely with Tier One and semiconductor suppliers.

Other things to know 

  • Commercial vehicle retail sales grew 102% while passenger vehicle sales grew 59% quarterly for Tata Motors’ India business
  • JLR invested GBP 0.5 billion in products and technology. Tata Motors, on the other hand, invested Rs.600 crores for the same 
  • During the second quarter, finance costs increased by Rs.378 crores to amount to Rs.2327 crores due to higher gross borrowings
  • Tata Motors’ stock rallied 41% in the last month. Since January 2021, the stock has given returns of 160% while in the last year, the returns stood at 264%.
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