Result Analysis: TATA MOTORS LIMITED Result Update Q4FY21 and FY21

Result-Analysis

result-tata-motor

Result Highlights:

  • In FY21 Consolidated: Revenue Stood at Rs.2,46,972.17 crore down by 4.5% Y-o-Y.
  • In FY21, Free cash flow (Automotive) was positive Rs.5300 crore as compared to negative Rs.12700 crore in FY20.
  • TML: In Q4, Revenue up 106%, EBIT at 3.0% (+1900bps), Free Cash Flow at Rs.2900 Crore. CV retails Q4: 92.2K up 7.2%; FY21: 208.4K down 42.2%; Market share steady at 42.4%, PV retails Q4: 79.6K up 191.6%; FY21: 228.9K up 53.8%. PV Market Share: Improves to 8.2% (vs 4.8% in FY20).
  • JLR: In Q4, Retail sales grew by 12.4% Y-o-Y supported by strong recovery in china in which sales increased 127% Y-o-Y and contributed by new Land Rover Defender, EBIT margin improved to 8.94% in Q4 and 2.6% for the full year.
  • Market Share: CV market share steady at 42.4%, PV market share improves to 8.2% in FY21 as against 4.8% in FY20.
  • Finance cost increased by Rs.845 Crore to Rs.8097 crore in FY21 due to higher gross borrowings.

Management commentary:

JLR: Thierry Bolloré, Jaguar Land Rover Chief Executive Officer concluded:

  • Despite the pandemic, this year has also seen significant positive change culminating in February with the launch of the Reimagine strategy focused on reimagining iconic British brands for a future of modern luxury by design.
  • Jaguar Land Rover is well placed to emerge from the pandemic as a stronger and more resilient company that is able to navigate and capitalise on the opportunities ahead.

TML: Guenter Butschek, CEO and MD, Tata Motors, said,

  • Scaled up the capacity at TML by prudently addressing several supply chain bottlenecks while maintaining the health, safety and wellbeing of our employees as well as the supporting ecosystem at the forefront.
  • A clear shift towards personal mobility and the rich preference for our ‘New Forever’ range of cars and SUVs led to the PV Business recording its highest ever annual sales in years and growing it’s market share to 8.2%.
  • The CV business consistently posted sequential quarter on quarter growth on back of improved consumer sentiments, buoyancy in e-business, firming freight rates and higher infrastructure demand including road construction and mining. We have successfully improved our operational and financial performance by reducing costs, generating free cashflows and providing best in class customer experience.
  • Company will continue to remain vigilant about the evolving COVID situation and have set in motion a comprehensive ‘Business Agility Plan’ to protect and serve the interests of our customers, dealers and suppliers.

Outlook:

TATA Motors Limited has reported above estimates number during Q4FY21 on the Revenue front. Both the Divisions were severely affected by the Covid-19 in early FY21 but as the lockdown eases in the different parts of the world the demand continues to rebound from Q3FY21. The Awareness of personal safety and social distancing switched the personal mindset from using public transport to Personal vehicle that enables the TML to gain market share to 8.2% in FY21 from 4.8% in FY20 and CV segment continuous to hold 42.4% of the Indian market. Company is continue to expanding it’s Portfolio in Electric vehicle with JLR has 12 Electric vehicle out of 21 vehicles in it’s portfolio and TML has Electric vehicle in PV segment which continuous to hold 75% Share in Indian EV market. Profitability of the company impacted by the strategic charges in JLR but strong demand by the North America and china, New launches in JLR portfolio, Expanding portfolio in EV helps the company’s revenue to grow organically. For TML Company is expecting the first half of the year is expected to be relatively weak but is targeting to deliver over 2.5% EBIT with Positive Free cash flow. For JLR, Company is facing supply chain issues in particular semi-conductor which are impacting the production of Q1FY22 and working closely with the supplier to resolve this issue. The company is still targeting an EBIT margin of at least 4.0% and break-even free cash flow after c.£2.5 billion of investment and c.£0.5 billion of restructuring costs that has already been accrued. Thus, we suggest to Accumulate the stock between Rs.312 to Rs332 for the Target price of Rs.370.

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