Would you suggest a buy on Tata Motors in the light of the latest quarter results and why?

Let me talk about the quarterly numbers of Tata Motors first. Total sales were down -4.53% for the Dec-21 quarter at Rs.72,229 crore consolidated basis. In Q3, Tata Motors saw improved traction in India business with 32.7% growth in Commercial Vehicles and 72% growth in sales of passenger vehicles or PVs. Incidentally, the overall numbers were impacted by -18.2% fall in sales of Jaguar Land Rover. Microchip shortfall still haunts.

EBITDA margin were at 10.2% overall. If you look at the two principal businesses of Tata Motors worldwide, the JLR business saw EBITDA margins at 12%, 380 bps lower on yoy basis while the EBIT margins were 1.4%, a fall of 530 bps yoy. The domestic PV and CV business saw EBITDA margins of 3.3%, which is 350 bps below last year. TML business had EBIT margins of -1.7%. Operating margins stood at 1.38%, which is gratifying for the company.

Net loss for Dec-21 narrowed quarter on quarter at Rs-1,516 crore compared to a much wider net loss of Rs-4,442 crore. In the Sep-21 quarter, huge provisions had been made for the JLR business on account of the adjustment required for the massive shift in business towards more EVs. On a yoy basis, the losses of Tata Motors contrasted with the profit of Rs.2,906 crore in the Dec-20 quarter.

EV sales hit a new peak of 5,592 units in Q3 in the India TML business. To me that is the key data point to watch out for and it is this EV that is going to drive interest in the stock. Use corrections and dips to add on to the stock.