Tata Motors' Rs 314.5 cr net loss in Q2 beats expectations; PV revenues up 83% while CV remains a pain point

Tata Motors, one of India's largest manufacturers of passenger and commercial vehicles, reported a consolidated loss of Rs 314.5 crore in the second quarter of FY21, better than the Rs 1290 crore loss estimated by a CNBC-TV18 poll.

However on a year-on-year basis, the automaker's losses widened for the September quarter, compared to Rs 216 crore in year-ago period. Consolidated revenue from operations decreased 18 percent to Rs 3,530 crore vs Rs 65,432 crore YoY.

Tata Motors beat street expectations owing to a sharp rebound in its passenger vehicle business, as well as, by implementing a strict agenda towards tightening costs, Group CFO PB Balaji said in a conference call with reporters.

"Revenue for the quarter decreased 3% to Rs 9.7kCr and pre-tax loss was Rs 1,212 crore (against pre-tax loss of Rs 1,270 crore in Q2FY21). Free cash flow for the quarter was Rs 2.3K crore, better than expected as the company drove the cost and cash savings agenda hard with Rs 1,455 crore delivered in Q2FY21. The investment spends were reduced significantly to Rs 669 crore for the quarter. The company ended the first quarter with a strong liquidity of Rs 5.6K crore," Tata Motors said in a statement.

Strong demand for personal mobility drove up passenger vehicle sales for both TaMo's domestic business (Tata Motors Limited, or TML) and in its UK-headquartered luxury brand Jaguar Land Rover.

Balaji said China, a critical market for JLR, was back on the growth path, while the UK was back to near-flat growth. JLR sales, he said, are expected to improve across geographies but there are concerns in those parts of the world which are still grappling with Covid-19 in its various stages.

For the September quarter, retail sales for JLR came in at 113,569 units, up 53.3 percent on Q1 but still down 11.9 percent year-on-year. PBT for JLR was reported at of £65 million on revenues of £4.4 billion, with a positive free cash flow of £463 million after £531 million of investment spending . TaMo's ‘Charge+’ program, the automaker said, generated £0.6 billion of cash and cost savings in the quarter.

For the domestic business, PV retail was at 53,500 units, an improvement of 73 percent YoY owing to sustained demand in the market and also a favorable festive season. TaMo said the PV business also achieved EBITDA breakeven. EBITDA for commercial vehicles, it added, was adversely impacted due to lower volumes and an unfavorable mix.

While Balaji said it is unlikely that demand will suddenly dip after the festive season, the company will watch for signs of continued demand momentum.

"Despite concerns around risk of second wave of infection in many countries and other geopolitical risks, we expect a gradual recovery of demand and supply in the coming months. In this context, we are committed to achieving near zero net automotive debt in the coming years by focusing on better front-end activations of our exciting product range and executing our cost and cash savings with rigor", it said.