Profit up for Tata Motors, Maruti Suzuki, TVS Motor in Dec quarter, chips supply still a worry

Tata Motors has delivered a strong performance in 3QFY23 reporting a consolidated net profit of Rs 2,958 crore for the quarter ended December 2022 and consolidated revenue growth of 23 per cent year-on-year to Rs 88,489 crore, which was according to Reliance Securities, better than expected due to improved realization at JLR. The company had reported a loss of Rs 1516 crore in the same quarter previous year. In its Q3FY23 results preview, Nomura analysts had projected TTMT to post positive surprises and beat estimates. 

The company also reported positive free cash flow (FCF) of Rs 5,300 crore in December 2022 quarter, compared to Rs 4,000 crore in the same quarter of the previous year on the back of improved cash profits and working capital. Jaguar Land Rover delivered on its plans and achieved positive FCF and profitability in the quarter as supplies improved, the company said. Tata Commercial Vehicles revenues in Q3 FY23 were up 22.5 per cent as against  Q3 FY22 at Rs 16,900 crore, showing better mix and better market operating prices. The company reported a profit before tax of Rs 900 crore compared to a loss of Rs 200 crore in Q3 of FY22.

The company remains cautiously optimistic in its outlook on the demand situation despite global uncertainties even as revenues of passenger vehicle unit rose 37 per cent yoy to Rs 11,700 crore, led by strong demand in both retail and wholesale segments. The retail segment grew 33 per cent yoy to a record 139,000 vehicles, while wholesale grew 33 per cent yoy to 132,300 vehicles pushed by strong demand for Nexon, Nexon EV, Punch, Tiago and Tigor CNG. The continued focus will be on profitable growth with improving semiconductor supplies and stable commodity prices aiding revenue growth, margin improvement and positive cash delivery in Q4 FY23, the company said.

Maruti Suzuki India more than doubled its net profit in the quarter ended December to ₹2,351 crore, compared with ₹1,011 crore a year earlier as per the results approved by the Board of Directors of MSIL for the period Q3 (October-December) FY2022-23. Improved semiconductor supplies and sustained demand for passenger vehicles, especially SUV sales, pushed up revenue to ₹27,849.2 crore, a 25 per cent yoy jump aided by sales of 465,911 vehicles in Q3.

However, a shortage of electronic components impacted production by about 46,000 vehicles in Q3. However, a shortage of electronic components impacted production by about 46,000 vehicles in Q3. Amidst uncertainty in supplies, Maruti Suzuki’s pending customer orders stood at about 363,000 vehicles at the end of the quarter, including 119,000 orders for its new models. According to Motilal Oswal Financial Services, the management commentary points to healthy demand scenario with both urban and rural market doing good and MSIL expects to grow faster than the industry in FY24. Driven by the new product launches, MSIL is looking at the SUV segment market leadership in FY24, states the MOFSL report, which expects good demand and favorable product lifecycle to boost market share and margins. “We expect a recovery in both market share and margins in FY24, led by an improvement in supplies, favorable product lifecycle, mix and operating leverage,” say MOFSL analysts.

Bajaj Auto Limited has reported a nearly 23 per cent yoy rise in net profit for the quarter ended December to Rs 1,491.42 crore and 3.3 per cent yoy rise in revenue from operations to Rs 9,315.14 crore. Operating profit, calculated as earnings before interest, taxes, depreciation and amortisation (EBITDA), rose by 29.4 per cent to Rs 1,777 crore. The EBITDA was the highest ever, surpassing the record set in the previous quarter, as per the company statement led by judicious pricing, better dollar realisation and a richer product mix.

Two and three-wheeler maker TVS Motor Company clocked a net profit of about  Rs 353 crore in the third quarter ended December of fiscal 2022-23, up 22.5 per cent from the Rs 288 crore clocked in the previous year Q3.  The profit before tax (PBT) grew 21 per cent at Rs 475 crore as against Rs 391 crore in FY2Q3 and operating revenue grew 15 per cent at Rs 6,545 crore yoy. “TVSL is enjoying the benefits of economies of scale and operating leverage, resulting in consistent double-digit EBITDA margin,” say MOFSL experts. While TVS’ electric vehicles registered sales of 0.29 lakh units in Q3 as against 0.02 lakh units in Q3FY22, total two-wheeler sales of 8.36 lakh units remained flat compared to the year-ago period. Two-wheeler exports were also flat at 2.07 lakh units as were total three-wheeler sales at 0.43 lakh units.

According to MOSFL’s the management interaction suggested domestic demand is expected to improve sequentially in 4Q, supported by better rural market sentiment on the back of strong rabi crop sowing and higher MSPs. Improving chip supplies would also support volumes of premium products. Retail sales have been ahead of wholesales in most of the markets. However, the management does not expect material benefits from low commodity prices to flow in 4QFY23. Motilal Oswal expects  volume growth to be likely to be driven by a recovery in the domestic 2W market, new products (Raider and iQube) and a recovery in exports.

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