JLR volumes may aid Tata Motors Q1 margins; demand outlook eyed: Analysts

Tata Motors consolidated revenue is likely to jump up to 42 per cent year-on-year (YoY) to Rs 1.02 trillion in the April-June quarter of fiscal year 2023-24 (Q1FY24), said analysts. The company is scheduled to announce the June quarter results on Tuesday, July 25.
 

As per brokerages, Ebitda (earnings before interest, tax, depreciation, and amortisation) margins may expand up to 764 basis points (bps) YoY to 12.1 per cent in Q1FY24, led by strong performance in the Jaguar Land Rover (JLR) business.
 

Adjusted profit-after-tax (PAT), meanwhile, is expected to tumble 155 per cent YoY to Rs 3,168 crore, pegged analysts.
 

That said, analysts estimate JLR's revenue to increase 57 per cent YoY, with its Ebitda margin expected to rise up to 14.7 per cent in the June quarter.
 

So far this calendar year (CY23), shares of Tata Motors jumped 61 per cent, as against a 9.6 per cent surge in the S&P BSE Sensex.
 

Factors to watch out for: Analysts said to watch out management's commentary on weak CV sales volumes in Q1FY24, current and expected discounting trends for CVs, FY24 demand outlook for CVs and PVs, and insights on competition.
 

Meanwhile, here's what brokerages estimate for Tata Motors in Q1FY24:
 

Sharekhan

The brokerage firm expects revenue to rise 42 per cent YoY to Rs 1.02 trillion in Q1FY24, however, it is expected to decline 3.6 per cent on a sequential basis. Healthy performance in JLR, meanwhile, is likely to lend expansion in Ebitda margins by 764 bps YoY to 12.1 per cent in the June quarter. PAT, on the other hand, may skid 155 per cent YoY to Rs 3,168 crore.
 

BNP Paribas

Analysts predict consolidated revenue to slip 7 per cent QoQ to Rs 98,719 crore in Q1FY24 due to weakness in passenger vehicle (PV) business. However, superior sales mix at JLR coupled with higher mix of utility vehicles in India's PV business is likely to expand Ebitda margin 117 bps QoQ to 13.3 per cent. That said, the brokerage firm has maintained a 'buy' call on the counter, with a target price of Rs 710 apiece.
 

Motilal Oswal

The brokerage firm said that India's business performance was a mixed bag as commercial vehicle volumes declined 15 per cent YoY due to pre-buy impact in the prior quarter, while PV grew 8 per cent YoY. However, easing input costs will enable Ebit margin expansion for CV/PV by 90 bps/190bps in the June quarter.
 

Analysts raise EPS estimate for FY24/25 by 8.7/11.6 per cent, driven by 9/11 per cent upgrade in JLR and better outlook for domestic business.