Tata Motors has announced that its consolidated revenue for FY23 has increased by 24.2% YoY to INR 345.9k crore, making it an all-time high revenue collection. Q4FY23 was one of the strongest quarters for the company, with consolidated revenues at INR 105.9k crore, translating to a 35.1% YoY increase.
The company noted that volumes continued to improve on strong India demand and better supplies at JLR while pricing actions and richer mix led to improved ASPs and higher revenue growth. Another key growth ladders were the easing inflation, better mix, pricing actions and favourable operating leverage, which resulted in strong improvements in margins and profits.
PB Balaji, Group Chief Financial Officer, Tata Motors, noted that the year ended on a strong note, with all automotive verticals delivering robust performances leading to multiple all-time high achievements.
The distinct strategy employed by each business is delivering, in unison, leading to a sharp improvement in overall results, he added.
A press release from Tata Motors noted that the company is optimistic about the demand situation despite near-term uncertainties and expects a moderate inflationary environment in the near term. It further aims to improve and deliver a strong performance in FY24. The momentum is expected to build through the year factoring in seasonality, stabilisation of the JLR supply chain and post-RDE impact in India, the release added.
JLR
The British luxury car brand posted revenues of £22.8 billion ($28.53 bn) in FY23, up by 25% YoY on the back of the improved chip crisis, while the revenues for Q4 of the fiscal stood at £7.1 billion ($2.13 bn), resulting in a 49% YoY growth. Notably, in FY23, Defender remained the best seller for the carmaker.
The wholesales for JLR in Q4 were at 94,649 units, up 24% YoY, while in FY23, wholesales stood at 321,362 units, up 9% over FY22. During the year, the company announced its plans to invest £15 billion ($18.77bn) over five years for its electrification and digital transformation.
Under the plan, JLR’s Halewood plant in the UK will become an all-electric manufacturing facility. While over 11,300 employees and partners are already reskilled for electrification, with a further 11,625 in training now.
Additionally, JLR opened three new global tech hubs to develop autonomous technologies as part of the NVIDIA partnership. New partnership with Tata Technologies was also announced during the year to achieve faster time to market though new cloud technologies.
On the product side, JLR had announced House of Brands strategy to amplify our brands: Range Rover, Defender, Discovery, and Jaguar, with Land Rover as a trust mark, visible on our vehicles, websites, social media and retail sites.
Going forward, the new Range Rover Sport SV will be revealed and available for pre-order this month, while the first pure electric Range Rover will be available for pre-order later this year.
On the Jaguar side, the first of three reimagined modern luxury electric Jaguars will be a 4-door GT, built in Solihull, UK, which will be unveiled in 2024.
The company expects the gradual improvements in chip supply to continue during the next fiscal year. While supply challenges and macro risks remain, it targets growing wholesales through the year and achieving EBIT margins of over 6% in FY24.
Adrian Mardell, Interim Chief Executive Officer, JLR, said, “We increased production and delivered revenue, profit, free cash flow and wholesales growth as chip supply continued to improve.”
Commercial Vehicles
On the CV side, the company noted that the Q4 revenues were at INR 21.2k crore as, up 15% yoy despite wholesales being down 3%, reflecting an improved mix and better market operating price. It added that the commercial vehicles industry continued to recover in FY23, led by strong demand in MHCVs and recovery of the CV passenger segment. MHCV growth was driven by the robust demand for heavy trucks required to service the strong infrastructure push by the Government, plus increased activity in e-commerce, construction, and mining.
However, demand for small and light commercial vehicles continued to be impacted due to high interest rates and high base effect. CV exports remained subdued due to the prevailing economic situation in most of its overseas markets.
Going forward, the advance buying in Q4FY23 in anticipation of price hikes post BS6 Phase 2 will have near term impact on demand, the company noted. However, with the Government’s continuing thrust on infrastructure development, Tata Motors remains optimistic about the overall CV demand in FY24 despite near-term challenges on interest rates, fuel prices and inflation.
The company aims to continue driving a demand-pull strategy and customer preference through innovation, service quality and thematic brand activation. It will aim for higher realisations and cost savings to secure double-digit EBITDA margins for FY24 and improve the performance of all business verticals.
Girish Wagh, Executive Director, Tata Motors, noted that the Indian CV sector showed promising growth in FY23, supported by a steady recovery in the economy, rising industrial activity and reopening of the market which helped regenerate demand.
“At Tata Motors, we strengthened our portfolio with introduction of new passenger and cargo mobility solutions, including showcasing range of future ready, safer, smarter and greener mobility solutions, optimised production, accelerated sales, stepped-up our focus on digitalisation and continued to drive the sustainability agenda,” he added.
The company focused on creating a ‘demand pull’ to step up market share, and improve realisations and profitability. This led to achieving double-digit EBITDA margins in Q4. Overall, Tata Motors CV domestic business grew 22% in FY23 vs FY22, Wagh said.
Passenger Vehicle
In FY23, PV domestic wholesales of the company grew 45.4% YoY to 538.5k vehicles, while retail grew by 44% to 523.5K vehicles, resulting in a rise in revenues by 52% to INR 47.9k crore. In Q4 FY23, revenues stood at INR 12.1K crore, up by 15.3% YoY.
Shailesh Chandra, Managing Director, Tata Motors Passenger Vehicles & Tata Passenger Electric Mobility, noted that passenger vehicle sales grew steeply in FY23 to set a new record for the Indian auto industry. Tata Motors recorded its third successive year of industry-beating growth, registering its highest ever-annual domestic sales and achieving a robust 46% sales growth over FY22.
During the year, the carmaker crossed the landmark of 50,000 annual EV sales, its highest ever, to post a growth of 154% over FY22.
“We successfully grew our leadership position by accelerating both EV adoption and the development of its enabling ecosystem. Going forward, we will continue to deliver on new product launches, debottleneck capacities and drive EV penetration further to deliver market-beating growth in coming years,” Chandra added.
Going ahead, the company expects the industry growth to moderate due to a strong base effect and other macro factors like rising interest rates, inflation, and the cost impact from progressive regulatory norms.
The electrification trend is set to strengthen further. Tata Motors intends to continue to stay agile and strengthen its portfolio and 'Reimagining' the front end whilst proactively managing the demand and supply situation.
In FY24, the company aims to continue to deliver market-beating growth, sustain the aggression in driving up EV penetration, consolidate market share gains, drive actions to reach double-digit EBITDA in the coming years and sustain positive free cash flows.
The company will integrate the new Sanand factory into its industrial footprint and unlock capacity during FY24, the release added.
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