Bond Market News

India’s largest automobile manufacturer, Tata Motors Limited (TML), the owner of Jaguar Land Rover (JLR), announced its consolidated 1Q2022 earnings results ending June yesterday with a negative Profit Before Tax (PBT) of INR 25.8bn ($347.3mn). The loss came even as the car maker reported strong YoY performance with net revenues of INR 664.1bn ($8.9bn), up 107.6%. The group’s EBITDA margin came at 8.3%, up 570bps YoY. The breakup of the result of JLR and TML Standalone (S) sales is as follows.

• JLR contributed £4.97bn ($6.87bn) to the group’s revenues, up 73.7% YoY on the back of a sale of 124,537 vehicles, higher by 68.1% YoY. The pre-tax loss was £110mn ($152mn) vs a loss of £413 mn ($571mn) last year.  While sales were up YoY, these were lower by 30,000 units (27%) than planned due to semiconductor shortages. FCF was negative, at -£996mn ($1.38bn). Semiconductor shortages are likely to continue in the next quarter which could impact the wholesale volumes by ~50%, they note. JLR expects a negative EBIT margin with a free cash outflow of less than £1bn ($1.4bn) in 2Q. The company presently has ~110k orders, the highest in its history, representing 3 months of sales cover.
• TML(S) sales contributed INR 119bn ($1.6bn), up 343.1% YoY after it sold 95,200 vehicles during the quarter. The pre-tax loss was INR 12.9bn ($173mn). Even though sales during the quarter were significantly higher YoY, these were lower on a QoQ basis due to the lockdowns post second pandemic wave in India. FCF was negative, at -INR 80bn ($1.1bn). The highlight was its 5x revenue growth in the EV business at its highest quarterly sales of 1,715 units. The company is focusing on improving its market share in the Commercial Vehicles (CV) space and continuing its sales momentum in Passenger Vehicles (PV) as it aims to deliver a positive EBIT margin with positive free cash flows in FY22.

The company said, “Demand remains strong for JLR and India PV while CV demand is showing gradual improvement. In this dynamic business environment, we anticipate that semiconductor issues, commodity inflation and pandemic uncertainty will have an impact in the short term. We expect the performance to improve progressively from H2.”

TML’s 5.75% 2024s and 5.875% 2025s were stable at 106 and 107.02 respectively. JLR’s 5% 2022s and 5.5% 2029s were stable at 102.14 and 101.25 respectively.

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