Tata Motors Q1 loss may widen to Rs 1,767 cr; revenue may dip QoQ: Analysts

Tata Motors Q1 results preview: The likely subdued performance would be led by chip shortage woes at UK subsidiary JLR, cost input pressures, and negative operating leverage, said analysts

Passenger vehicle giant Tata Motors’ consolidated net loss is likely to widen to Rs 1,766.5 crores in the April-June quarter (Q1FY23) from Rs 1,033 crores in Q4FY22, according to an average of five estimates compiled by Business Standard.

However, on a yearly basis, it would narrow down from Rs 4,451-crore net loss incurred in Q1FY22. Analysts, however, say the year-ago period is not comparable due to the Delta Covid-19 wave-led low base. The company is slated to report its Q1FY23 results on Wednesday, July 27.  

Sequentially, consolidated revenue is likely to decline between 5-10 per cent to around Rs 70,230 crores.  

The company’s likely subdued performance would be led by chip shortage woes at its UK subsidiary Jaguar Land rover (JLR), cost input pressures, and negative operating leverage, analysts said.

“Despite a better standalone commercial vehicle (CV) performance, JLR’s weak performance would drag the overall consolidated profitability of the company, and we expect it to report a loss of Rs 1,500 crore in this quarter,” said analysts at Reliance Securities. 

That apart, industry demand outlook, commentary on supply constraints, timeline for benefit of declining input costs, and impact of geopolitical turmoil will be tracked.

Here’s a rundown of top brokerage expectations: 

Reliance Securities: Standalone volumes are expected to have grown by 103 per cent YoY but down 15 per cent QoQ. Within this, JLR volumes are likely to have fallen by 15 per cent YoY and 6 per cent QoQ, which will impact the company’s consolidated revenue and earnings. 

Kotak Institutional Equities: Standalone revenues are estimated to have fallen 15 per cent QoQ led by a 16 per cent volume decline and 1 per cent rise in average selling price due to recent price hikes. On a consolidated basis, revenues may fall by 5.3 per cent with domestic PV business likely to report Ebitda margin of 6.6 per cent, down 20 bps QoQ mainly due to input price headwinds. 

HDFC Securities: Tata Motors may post Rs 2,000-crore loss in Q1 due to weaker geographic mix and the drawdown of Range Rover Sport SUV. CV segment margins are likely to decline from the last quarter on rising input costs. JLR is expected to post a marginal Ebit loss due to adverse mix and impact from chip shortage. 

IIFL Securities: JLR volumes (ex-China JV) may have declined 15 per cent YoY and 6 per cent QoQ. Weak volume is attributable to chip shortage, the Russia-Ukraine conflict and China lockdowns. 

On a standalone basis, Tata Motors may report yearly volume growth of 102 per cent, partly due to base effect. This would be 5 per cent lower than Q4FY22 volume on seasonality factor. Price hikes taken by the company would be positive for Ebit margins from the preceding quarter but input costs and negative operating leverage would have been key headwinds.

Overall, the brokerage said it expects consolidated results of the company to be negative with both JLR and India business in the red.

Motilal Oswal: India business is expected to have continued with strong growth in passenger vehicle (PVs) and CVs. India Ebitda margins are estimated to decline sequentially due to raw material cost inflation and operating deleverage. JLR volumes will decline on a yearly basis due to chip shortages. The brokerage has lowered its FY23 EPS estimates on Tata Motors by 12 per cent due to reduction in JLR volumes and higher interest costs.