MUMBAI
Tata Motors Ltd. first-quarter consolidated net profit stood at ₹ 3,202.80 crore buoyed by a sharp improvement at its Jaguar Land Rover (JLR) unit and commercial vehicle (CV) business.
The company had recorded a net loss of ₹5,006.60 crore in the year-earlier period. For Q1, the automaker’s revenue rose 42.1% year-on-year to ₹101,528.49 crore.
Revenues at JLR improved by 57% to £6.9 billion on strong wholesales and improved mix resulting in anEBIT margin of 8.6% (up 1,300 basis points). CV volumes were lower by 15% year on year (YoY) due to transition to BS6 Phase2. However, EBIT margins improved to 6.5% (up 370 pbs) benefitting from the demand-pull strategy. The Passenger Vehicles (PV) business was steady with 11.1% revenue growth and EBIT of 1% (up 10 bps), the company said in a filing.
“FY24 has begun on the right note with all automotive verticals delivering strong performance. The distinct strategy employed by each business is now delivering consistent results and making them structurally stronger,” said P.B. Balaji, Group Chief Financial Officer, Tata Motors Ltd. on a conference call.
“We remain confident of sustaining this momentum in the rest of the year and achieve our stated goals,” he added.
On the outlook, Tata Motors said it remained optimistic on the demand situation despite near-term uncertainty. “We expect a moderate inflationary environment to continue in the near term. We aim to deliver a strong performance in the rest of the year too,” the company said.
Much of the hope is now pinned on JLR which has reported strong financial performance for the third consecutive quarter. As on June 30, 2023 the cash in hand at this unit increased to £4 billion and its net debt reduced to £2.5 billion. The order book at this unit was strong at 1,85,000 units with Range Rover, Range Rover Sport and Defender representing 76% of the order book.
Tata Motors said Tata Son’s newly-announced £4 billion battery cell giga factory in the U.K. will provide JLR with stable and secure supplies to electrify JLR’s next generation luxury vehicles.
The company also announced a corporate action to further simplify its capital structure. The company’s board on Tuesday approved a Scheme of Arrangement for cancellation of ‘A’ Ordinary Shares, and issue of 7 Ordinary Shares for every 10 ‘A’ Ordinary Shares as Capital Reduction Consideration.
Post completion of delisting of the American Depository Shares from the New York Stock Exchange as of January 23, Tata Motors has currently two types of listed equity securities, namely Ordinary Shares and ‘A’ Ordinary Shares which will now extinguish.
The ‘A’ Ordinary Shares carrying 1/10th of voting rights of Ordinary Shares and entitled to five percentage points higher dividend were first issued in 2008 and subsequently in a further QIP in 2010 and rights issue in 2015.
“Regulatory changes have since restricted the issuance of such instruments with differential voting rights and TML remains the only large listed corporate with such an instrument,” the company said.
The ‘A’ Ordinary Shares currently trade at 43% discount to Ordinary Shares. The Capital Reduction Consideration implies a 23% premium on the previous day’s closing share price of ‘A’ Ordinary shares, translating to 30% discount over Ordinary Share price and significantly below its historical averages, the company said.
“The Scheme will lead to a reduction in the outstanding equity shares by 4.2%, making it value accretive for all shareholders,” it added.
For all the latest business News Click Here
