Tata Motors Ltd Q4 FY22 Earnings Conference Call Insights

Key highlights from Tata Motors Ltd (TATAMOTORS) Q4 FY22 Earnings Concall

Management Update:

• TATAMOTORS said it increased its market share to 13.4%, which was the highest ever sales both at a quarter level and for the full year of FY22, in the company’s history of 22 years of being in PV business.

Q&A Highlights:

• Jinesh Gandhi of Motilal Oswal asked that the FY23 target of EBIT 5% and FCF of GBP1 billion is based on what kind of volumes and if the mix would normalize in 1H23. Adrian Mardell, CFO, Jaguar Land Rover said the company does expect volumes to increase as RR and RRS products come through but can’t give  a specific number. And on mix, it’s not expected to normalize in IH23.

• Rakesh from BNP Paribas asked about the reason for GBP500 million of lower investments in JLR vs. planned levels. Adrian Mardell, CFO said there’s a mixture of reasons for the reduction. Some are undefined spend and some will be caught up as the company go into FY23.

• Pramod Amthe with InCred Capital asked about the confidence behind absolute value guidance for JLR in times of supply chain and commodity uncertainties. Thierry Bollore CEO Jaguar Land Rover said the gradual increase QoverQ is giving TATAMOTORS confidence that it will continue on that trend and accelerate.

• Pramod Amthe with InCred Capital also asked about the order cancellation trends in recent months as EV capacities are created in Europe. Thierry Bollore CEO Jaguar Land Rover replied that on cancellations, the robustness and desirability of TATAMOTS products is such that cancellations are almost non-significant.

• Joseph George of IIFL asked about the contradiction of strong order book with increase in JLR and retailer inventory. Adrian Mardell, CFO clarified that it’s a healthy sign and it’s required to refill the pipeline. The company added that it would expect this trend to increase and to continue.

• Kapil Singh of Nomura enquired about the volume outlook for 1Q23 and FY23. Adrian Mardell, CFO replied that 1Q23 is going to be difficult due to China. However, FY23 will be stronger than FY22. The bottlenecks would be RR changeover, China COVID and a little bit of Ukraine and the semicon piece.

• Kapil Singh of Nomura also asked about ASP in FY23 vs. FY22 in India. Shailesh Chandra, MD answered that it’s very difficult to assess the ASP change, especially due to the commodity situation. But from a mix perspective it will be pretty much in line with the mix and realizations seen in 4Q.

• Kapil Singh of Nomura queried about the order book and monthly order inflow for EV and overall. Shailesh Chandra, MD replied that overall it will be about 3-3.5 times of the monthly supply rate. For EVs, it would be about 5 months.

• Kapil Singh of Nomura asked about the production loss incurred in April and May due to supply constraints. Shailesh Chandra, MD said that in terms of what TATAMOTORS could have produced based on the capacity and order book, it would be a 10-15% loss the company would have incurred in term supply constraints in April.

• Kapil Singh of Nomura asked about the EV launch outlook in FY23. Shailesh Chandra, MD answered that in the next 5 years the company is going to launch 10 products. So at least 2 products can be expected every financial year.

• Chirag Shah from Edelweiss asked about a production range that can be achieved in 1Q and 2Q based on current visibility. Adrian Mardell, CFO replied that 1Q is going to be difficult to lift due to the China position, Range Rover (RR) and the RRS position. TATAMOTORS expects on increase production in RR and RRS after 1Q.