Tata Motors, Tata Motors DVR recover 4% from intra-day lows

On Wednesday, after market hours, Tata Motors announced that its subsidiary, Jaguar Land Rover recorded a 37.6 per cent year on year (YoY) drop in retail sales to 80,126 units in Q3.

Shares of Tata Motors and Tata Motors DVR have recovered 4 per cent from their respective intra-day lows on the BSE on the back of heavy volumes. They were down 2 per cent and 1.4 per cent, respectively, in trade today. 

At 02:12 pm, Tata Motors was up 1 per cent at Rs 512.35, as it bounced back 3.5 per cent from its intra-day low of Rs 495. Tata Motors DVR was trading 3 per cent higher at Rs 262, after it recovered 4 per cent from the day's low of Rs 251.75. In comparison, the S&P BSE Sensex was up marginally, 0.02 per cent at 61,164 points.

Tata Motors (Rs 536.50) and Tata Motors DVR (Rs 298.50) had hit their respective 52-week highs on November 17, 2021. Differential Voting Rights (DVR) shares are shares that are permitted to be issued with differential voting and differential dividend rights.

On Wednesday, after market hours, Tata Motors announced that its subsidiary, Jaguar Land Rover (JLR) recorded a 37.6 per cent year on year (YoY) drop in retail sales to 80,126 units in the October-December quarter (Q3FY22).

Sequentially, JLR witnessed a 13.6 per cent fall in retail sales to 80,126 units in Q3FY22 from Q2FY22. JLR said retail sales for Q3FY22 continued to be constrained by the global semiconductor shortage, though the company started to see some improvement in chip supply and wholesale volumes compared to the preceding quarter.

However, underlying demand for JLR products remains strong and the company has proactively managed semiconductor supplies to maximise production of higher margin products, it said. 

“Despite the impact of the semiconductor shortage on production and sales, the company continues to see strong demand for its products with global retail orders at record levels. The total order book has grown to over 154,000 units, up about 30,000 orders from the prior quarter for the New Range Rover, while demand for the Land Rover Defender remains strong with about 36,000 orders,” it said in a statement.

At the end of January, Jaguar Land Rover expects to report unaudited results for the December quarter. Initial estimated cashflow for the quarter is around £150 million positive. Looking ahead, the chip shortage remains dynamic and difficult to forecast, however, it expects supply to continue to improve in Q4 of the fiscal year ending 31 March 2022.

"Tata Motors is likely to register a 2 per cent YoY revenue growth, supported by a 45 per cent jump in India PV/CV divisions. In comparison, JLR revenue (GBP) should decline by 13 per cent, owing to chip shortages. EBITDA margins should contract by 700bps, owing to lower margins in JLR and India divisions. We expect strong revenue performance ahead for both JLR and India PV/CV divisions, supported by improving chip supplies and CV upcycle", Emkay Global Financial Services said in its Q3 preview.

"Tata Motors is expected to report a recovery in Q3FY22 post a subdued performance in H1FY22. With single digit rise in ASPs on a consolidated basis for Q3FY22, we expect Tata Motors to report net sales of Rs 78,138 crore, up 15.9 per cent quarter on quarter (QoQ)," said ICICI Securities said in its result preview.

EBITDA in Q3FY22 is expected at Rs 8,650 crore with corresponding EBITDA margins at 11.0 per cent, up 90 bps QoQ. JLR’s EBITDA margins are expected at 12.0 per cent while the same for Indian operations is expected at 5.0 per cent. At PAT level, the brokerage expects the company to report a loss of Rs 816 crore in Q3FY22.