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ICICI Securities Report
Tata Motors Ltd.’s operational performance was marginally ahead of our estimates with Ebitda margin for commercial vehicle, India passenger vehicle and Jaguar Land Rover combined being ~100 basis points higher than expected.
JLR’s wholesale volumes were up ~10% QoQ to ~76,000 units with ~60 bps QoQ improvement in Ebitda margin at 12.6% amid adverse raw material costs and adverse mix QoQ.
With prudent capex spend (~£0.5 billion) and improved profitability, JLR was able to generate positive free cash flow of £340 million and in turn helped Tata Motors reduce its net auto debt by Rs 117 billion QoQ to Rs 487 billion.
With the orderbook at 168,000 units and low channel inventory in system, we expect mix to normalise resulting in mean reversion of realisation and gross margin as production improves.
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