Analysts Have Different Views About Jhunjhunwala's Second Biggest Stock Bet in the Fourth Quarter
NEW DELHI: Rakesh Jhunjhunwala's second biggest stock bet, Tata Motors NSE 3.61 %, is going to report March quarter earnings later today.
He had entered the Tata group stock in the Third quarter of FY21 and has been keeping his stake constant at 1.3% for three quarters now. On Tuesday his stake was worth Rs. 1,373 crore.
After Jhunjunwala's stake purchase in the company he earned a big profit in the December quarter after three quarters of great losses. For the March quarter, he reported a consolidated profit after tax of Rs 2,772 crore and a Rs 9,894 crore loss reported for the year-ago quarter. The Tata group firm had reported a profit of Rs 2,906.45 crore in the December quarter after reporting losses in the previous three quarters.
In a poll, some analysts projected that the revenues for Tata are rising 40% YoY to Rs 87,518 crore from Rs 62,493 crore in the year-ago quarter. Margins are seen expanding to as much as 12.8% from 4.6% YoY.
According to analysts, a strong volume growth may lead to higher operating leverage. Commodity cost pressures may impact the gross margins negatively. Meanwhile, an astronomical rise in the personal vehicle volumes can weigh on average selling price and margins.
Tata Motors’ Indian operations have reported a total volume of 1.92 lakh units, up 89% YoY, and up 21% in sequence. JLR reported volumes of 1,23,000 units, which were 7% ahead of its expectation. Consolidated profit at Rs 3,444 crore and revenues at Rs 86,235 crore are seen along with an EBITDA margin at 12.9%.
ICICIdirect is expecting Tata Motors to report a muted performance in Q4 despite a sequential and uptick in volumes at both JLR & standalone operations, basically because of pressure on gross margins due to a rise in input costs and already disclosed exceptional charge amounting to 1.5 billion pounds at JLR.
Motilal Oswal Securities are expecting India business to flip to the positive side on demand recovery in commercial vehicles and strong personal vehicle demand. They also think India business will benefit from a strong mix and operating leverage. The improvement in JLR mix may continue with higher share of Land Rover and China sales and cost-cutting will help their performance. That being said, a sequential decline in JLR margins is likely to happen because of a lack of certain one-offs in the December quarter.