Tata Motors - Q4FY13 Result Review - Angel Broking

For 4QFY2013, Tata Motors (TTMT) consolidated performance better than our as well as street expectations on all broader fronts, as strong operating performance from JLR offset soft performance at standalone biz and other subsidiaries. The standalone operations posted loss of Rs. 312cr, against our expectations of a net loss of ~Rs. 490cr, primarily on account of higher discounts and higher operating costs for transport operators impacting demand for MHCV industry. The consolidated top-line registered a strong sequential growth of 21.5% qoq to Rs. 56,002cr, which was above our estimate of Rs. 50,605cr on account of strong performance from JLR. The JLR top-line grew by ~22% yoy to GBP 5,053mn, led by ramp-up in volumes of the new Range Rover.

On a sequential basis, consolidated EBITDA margins grew by ~160bp qoq to at 14.9% (~+80bp yoy) vs. our expectations of 12.5%, driven by the robust performance of JLR, which was underlined by the favorable impact of the new Range Rover. JLR margins came in at 16.9% (+230bp yoy, +290bp qoq) benefitting from better geographic/product mix and favorable currency. Depreciation expense in JLR at GBP 213mn (+73% yoy) continues to maintain upward trajectory as new products/platforms got amortized. Adjusted net profit at GBP 466mn was marginally ahead of estimates. Standalone margins stood at 3.6% (-600bp yoy, +140 bps qoq). On consolidated level, adjusted net profit came in at Rs. 3,931, beating our estimate of Rs. 2,298cr, aided by ~19% qoq lower tax, driven by a tax credit for past income tax losses of GBP 225mn in a UK subsidiary. As of 4QFY2013, on a consolidated level, TTMT has a healthy net auto debt/equity of ~0.24x.

While the 4QFY2013 results are on expected lines, management's commentary did not indicate any major signs of a revival in domestic business soon. In trucks, TTMT has contained inventory and discounts at the cost of market share. Company remains cautiously optimistic on JLR, with the key positive being the JLR model cycle; the company stated that margins on new Range Rover and Range Rover Sport are good. We are still in the process of revising our numbers and therefore the rating is under review.

Source : Equity Bulls

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