Tata Motors Q2 net loss narrows; JLR puts up a good show

Tata Motors reported a consolidated net loss of Rs 227.62 crore in Q2 September 2019 over a consolidated net loss of Rs 873.27 crore in Q2 September 2018.

Consolidated net sales declined 9.2% to Rs 64,763.39 crore in Q2 September 2019 over Q2 September 2018. The announcement was made after trading hours yesterday, 25 October 2019.

Consolidated EBITDA margin expanded by 250 bps to 12.4% in Q2 September 2019 over Q2 September 2018. Finance costs increased by Rs 609 crore to Rs 1,835 crore during Q2 September 2019 against same quarter last year due to higher borrowings.

Tata Motors's standalone business growth continues to be impacted by subdued demand, higher axle loads, liquidity stress, low freight availability for cargo operators and general economic slowdown.

In Q2 September 2019 wholesales (including exports) decreased 44.1% to 106,349 units. In the domestic market, M&HCV trucks de-grew 58.5%, ILCV trucks de-grew 32.7%, SCV & Pick Ups de-grew 32.5% and CV Passenger de-grew by 42.2%. Domestic PV volumes were down 51.8%.

Jaguar Land Rover (JLR) improved its performance this quarter and delivered a well-rounded performance. In particular, the improvement in China on the back of better operational metrics is reassuring.

JLR generated pre-tax profits of 156 million in the quarter, 246 million better year-on-year. The improvement reflects favourable wholesale volume and mix, operating costs, depreciation and amortization, and foreign exchange. Profit margins were also significantly improved with an EBIT margin of 4.8% and an EBITDA margin of 13.8%.

JLR's Project Charge transformation programme contributed 162 million of cost improvement and 285 million reduction in investment spending in the quarter. With 2.2 billion efficiencies achieved to date, Jaguar Land Rover remains on track to achieve the full targeted 2.5 billion by 31 March 2020 and further improvements beyond then.

The board of directors of Tata Motors approved a preferential allotment of ordinary shares and warrants to the promoter, Tata Sons, for an aggregate consideration of about Rs 6,500 crore subject to shareholder approval. This strong support from Tata Sons, will benefit all shareholders by allowing the business to focus on the long-term strategy, reduce debt levels and provide rating support to the Tata Motors Group.

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