Tata Motors on Friday beat Street estimates to post a 67 per cent growth in consolidated net profit for the third quarter ended December 31, 2020, as the demand situation improved amid a strong festive season and more preference for personal mobility.
The auto maker posted a net profit of Rs 2,906.45 crore against Rs 1,738.30 crore in the same period of the previous year and a loss of Rs 314.45 crore in the preceding three months. Analysts were expecting Tata Motors to post net profits of around Rs 2,000 crore.
The better-than-expected performance came as the global economy began to recover from the adverse effects of Covid-19, leading to a sequential sales improvement in its luxury car arm Jaguar Land Rover (JLR). Back home, a good festival season and people opting for personal mobility saw its passenger vehicle (PV) business posting its highest sales in the last 33 quarters.
For the quarter, Tata Motors’ net revenues came in at Rs 75,654 crore, a rise of 5.5 per cent over the previous year’s Rs 71,676 crore.
JLR recovery
JLR saw a strong sequential recovery in retail sales across all the markets, except the UK, where the third quarter is seasonally weak.
The revenues of JLR rose to £5.98 billion from £4.35 billion in the second quarter, though it was lower than last year’s £6.40 billion. However, profit before tax came in at £439 million compared with £65 million in the previous quarter.
Tata Motors said the business achieved strong positive free cash flows of £0.6 billion, reflecting the recovery in sales.
During the period, retail sales were 128,469 vehicles, up 13.1 per cent over the preceding three months but still 9 per cent lower than pre-Covid levels a year ago. Sales in China were higher by 20.2 per cent against the prior quarter and 19.1 per cent over the year ago period. according to the company, most of the other regions also witnessed a sequential recovery though still below prior year.
On a standalone basis, Tata Motors posted a strong performance with revenues rising 36 per cent over the same period of the previous year to Rs 14,507.50 crore. The company added that domestic passenger vehicle volumes were up 87.5 per cent. Losses here narrowed to Rs 600.54 crore against Rs 1212 crore in the preceding three months and Rs 1024 crore in the year ago period due to better volumes, improved product mix and cost savings. This was however offset partially by lower proportion of commercial vehicle in total sales, commodity inflation and financing costs.
“The auto industry witnessed a strong sales momentum in the third quarter, driven by the pent-up demand and a steady recovery of the economy. We could leverage the improved demand by a consistent ramp-up of production, addressing supply chain bottlenecks... We improved our operational and financial performance by reducing costs, generating free cash flows, providing best in class customer experience. Despite the current global challenge of semiconductor supplies, we are confident of keeping our performance improvement on track in this quarter to close the year on a high for an even stronger play in 2021-22’’, Guenter Butschek, CEO and MD, Tata Motors, said.