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Bond Market News

Tata Motors’ Loss Widens and Net Debt Rises 25%

July 28, 2022

India’s Tata Motors reported a widening net loss of INR 49.5bn ($620mn) on a consolidated basis for the quarter ended June 2022, vs. a net loss of INR 44.5bn ($560mn) a year ago. While the company’s revenues grew 8.3% YoY to INR 719.3bn ($9bn), global arm Jaguar Land Rover’s (JLR) quarterly revenue declined 11.3% YoY to £4.4bn ($5.3bn) on account of the impact of supply challenges including semiconductor shortages, slower than expected ramp-up of the New Range Rover and New Range Rover Sport production and intense China lockdowns. Domestic businesses Tata Commercial Vehicles and Tata Passenger Vehicles revenues more than doubled to INR 162.7bn ($2bn) and INR 115.6bn ($1.4bn) respectively on the low base effect of the Covid-impacted quarter in the previous year. Tata Motors’ EBITDA margins saw a 90bp YoY compression to 7.4%. Total borrowings for JLR stood at £7.9bn ($9.5bn), and Tata Motors’ domestic business borrowings stood at INR 186.2bn ($2.3bn). Net auto debt rose 25% QoQ to INR 607bn ($7.6bn) due to its adverse working capital position. Free cash flow was negative at INR 98bn ($1.2bn) vs. negative INR 182bn ($2.3bn) last year, primarily due to the working capital impact of INR 89bn ($1.1bn). The automaker aims to deliver improvements in EBIT and free cash flows from the current quarter onwards to get to near net-auto-debt free by FY2024. During the previous quarter, Tata Motors signed a tripartite MOU for the potential acquisition of Ford’s Sanand vehicle manufacturing facility.

Tata Motors’ dollar bonds were slightly lower with its 5.875% 2025s down 0.03 points to 99.1, yielding 6.23%.

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