InvestorQ : How do you see the results of Tata Motors for the Dec-20 quarter?
diksha shah made post

How do you see the results of Tata Motors for the Dec-20 quarter?

Aashna Tripathi answered.
2 years ago

While big boy Jaguar Land Rover reported flat sales, there was better profitability even as the local CV and passenger car business benefited. Pricing was also better in the quarter in the domestic market as festival demand in the last quarter boosted sales and profits. Tata Motors Q3 PAT shot up by 67.5% at Rs.2,941 crore on top line boost.

How exactly did the top line pan out for Tata Motors? It reported 5.55% growth in revenues for the Dec-20 quarter at Rs.75,654 crore on a consolidated basis. It must be remembered that Jaguar Land Rover accounts for over 80% of total sales of Tata Motors and that volume growth was flat. However, there was growth visible in domestic CV sales and passenger vehicle sales.

Operating profits for the Dec-20 quarter came in 174% higher at Rs.6,004 crore. This was largely on account of the total cost structure of operations remaining static despite higher sales. This was on account of several cost control measures initiated by the Tata group during the year under consideration. This led to better absorption of fixed costs resulting in better margins.

The margin story of Tata Motors was visible in operating and net margins. For example, the operating margins or OPM more than doubled from 3.06% in the Dec-19 quarter to 7.94% in Dec-20 quarter. During the same period, the net profit margins also shot up from 2.45% to 3.89% for the Dec-20 quarter. The net margin growth could have been still better had it not been for a sharp spike in the tax liability.