Tata Motors’ JLR trumps FY23 volume guidance on robust Q4

Wholesale volumes, excluding the joint venture with China, rose 24% year-on-year (y-o-y) and 19% sequentially to 94,649 units. This compares to a growth of 15% y-o-y and 6% sequentially in Q3. A similar trend was seen in Q4 retail sales volumes.

While JLR put up a weak show in the half-year ended September (H1FY23), the solid performance in H2FY23 led to the company surpassing FY23 volume guidance by nearly 4%. On a y-o-y basis, JLR’s FY23 volume was up by 9% to 321,362 units.

The company in the Q3 earnings call had cautioned about a drop in the order book in Q4 as it would focus on fulfilling backlog over new orders. In line with this, JLR’s order book declined 7% sequentially to 200,000 units as of end Q4. It augurs well that 76% of the order book is inclined towards Range Rover, Range Rover Sport and Defender.

Considering the better-than-expected volume performance from JLR in Q4, analysts at Motilal Oswal Financial Services have raised Q4 consolidated estimates for revenue, Ebitda and profit after tax by 6-27%. Ebitda is short for earnings before interest, tax, depreciation and amortization.

Meanwhile, Tata Motors’ domestic business, commercial vehicles and passenger vehicles saw sequential improvement in their Q4 wholesale volumes.

“While the India CV business will see a cyclical recovery, the India PV business is seeing a structural recovery. JLR is also witnessing a cyclical recovery, supported by a favorable product mix,” said Motilal Oswal analysts. However, supply-side issues will delay the recovery process, they added.

Shares of Tata Motors are down 11.5% from their 52-week highs of ₹494.40 apiece seen in August. A positive surprise on the margin front would be a key trigger for the stock.