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Motilal Oswal Report
We meet the management of Tata Motors Ltd. to get an update on the business, especially for Jaguar Land Rover, considering the changing operating environment. semi conductor shortages still remain the key bottleneck for JLR, which is in turn impacting profitability and cash flows. The management maintained its FY23 Ebit margin/free cash flow guidance of 5%/£1 billion for JLR. It expects to be near zero net debt levels for the consolidated automotive debt by FY24. The key takeaways from our meetings are:
Demand is not a concern in the premium segment. Macro headwinds are yet to impact demand. The order book is still growing and cancellation rates are still very low. Its order book is now equal to three quarters of production, and hence any demand impact will reflect only after four quarters.
For JLR, the biggest issue remains semiconductor supplies. JLR is the most impacted player given the higher usage of semiconductors in its products, smaller scale, and product launches starting with the Defender.
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