Tata Motors Q3 preview: What to expect from auto major's quarterly results?

Tata Motors Q3 preview: Tata Group's auto arm, Tata Motors, may see improved financial performance, at the consolidated level, during the October-December (Q3) quarter for financial year 2022-23 (Q3FY23).

The company, which is scheduled to report its earnings on Wednesday, January 25, could also see margin expansion on the back of operating leverage benefits, and benefit of fall in key raw material prices.

Ahead of the results, shares of the company rose 4 per cent to Rs 423.80 on the BSE in Tuesday’s intra-day trade amid heavy volumes. The average trading volumes at the counter more-than-doubled today, with a combined 19.24 million equity shares changing hands on the NSE and BSE till 11:43 AM. READ MORE

Here's what key brokerages expect from Tata Motors' Q3FY23 results:

Nuvama Institutional Equities

TaMo’s consolidated revenue is pegged at Rs 83,848 crore by the brokerage, higher by 16 per cent year-on-year (16 per cent YoY) and 5 per cent quarter-on-quarter (QoQ).

Further, volume recovery and product mix improvement will drive margins during the said quarter. Ebitda (earnings before interest, tax, depreciation, and amortization) is seen rising 19 per cent on year/30 per cent on quarter to Rs 8,031.1 crore.

Prabhudas Lilladher

This brokerage expects consolidated revenue to increase 14.6 per cent YoY to Rs 82,795.8 crore from Rs 72,229.3 crore. Sequentially, it would be an improvement of 4 per cent from Rs 79,611.4 crore.

"We expect JLR (Jaguar Land Rover) volumes to grow in mid-single digit led by servicing of order book, and semiconductor supply improving," it said.

Tata Motors' standalone revenue, however, could decline 2.5 per cent QoQ owing to 4.5 per cent drop in volume. Overall, Ebitda margin is seen at 11.9 per cent in Q3FY23 vs 12.5 per cent YoY/11 per cent QoQ.

Consolidated Ebitda is projected at Rs 9,852.7 crore relative to Rs 9,056.8 crore last year, and Rs 8,717.8 crore in Q2FY23.

Sharekhan

It expects consolidated revenue to grow by 12.5 per cent QoQ to Rs 80,927 crore, led by 21 per cent increase in JLR revenues (in Pound terms), partially offset by 2 per cent decline in standalone business. Standalone revenue is seen at Rs 82,955 crore, up 15 per cent YoY/4 per cent QoQ.

"Consolidated Ebitda margin could improve 630 bps QoQ to 9.7 per cent on the back of operating leverage benefits, and benefit of fall in key raw material prices. We expect JLR Ebita margin to improve 510 bps QoQ to 11.3 per cent, led by improved product mix, operating leverage benefits, and cost optimisation," the brokerage said.

Standalone Ebitda margin is seen at 9.8 per cent. Moreover, standalone net profit is baked in at Rs 7,966.4 crore by the brokerage, even as it seen consolidated net loss at Rs 324 crore.

Phillip Capital

Striking a more cautious note, Phillip Capital expects standalone revenue of Tata Motors to fall 3.4 per cent sequentially to Rs 14,351 crore from Rs 14,851 crore. It would, however, be an increase of 17 per cent on year.

"Revenue is likely to grow by 17 per cent YoY as commercial vehicle (CV) volumes picked up cyclically, and supply constraints eased, while demand remained strong. Ebitda margin will likely show an improvement of 120 bps QoQ to 4.9 per cent, on higher volumes (QoQ) and correction in raw material prices," it said.

Kotak Institutional Equities

The brokerage sees standalone net loss narrowing to Rs 26.50 crore from Rs 215.70 crore loss in September quarter, and Rs 610 crore loss in the year-ago quarter (Q3FY22).

Revenue may rise around 18 per cent YoY to Rs 14,544 crore compared with Rs 12,352.80 crore in the same quarter last year. Margin, too, may expand to 5.2 per cent from 4.4 per cent QoQ/2.4 per cent YoY.

On a consolidated basis, Kotak sees profit at Rs 800 crore against a loss of Rs 1,796 crore in the year-ago quarter.