Motilal Oswal: Tata Motors Q1 Results - Expect Gradual Recovery In FY21, But Positive Free Cash Flows From Q2
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Motilal Oswal Report
Tata Motors Ltd. had its toughest quarter ever with net consolidated losses of Rs 84 billion as both Jaguar Land Rover and India business were badly hurt by Covid-19 related lockdowns.
Unwinding of working capital and weak operating performance led to consolidated (auto) free cash flow (FCF) being negative at approximately Rs 182 billion.
However, it expects positive FCF in both businesses Q2 FY21 onwards. Recovery in both businesses is critical for net debt reduction (Rs 678 billion, increase of Rs 196 billion QoQ).
Sharp volume decline, adverse mix and higher fixed cost led to the fourth consecutive quarter of Ebitda loss (approximately Rs 7 billion versus estimate approximately Rs 11.7 billion).
The beat was led by 10% YoY increase in realizations (due to higher spare contribution) and cost savings of Rs 5.4 billion. Adjusted net loss was at approximately Rs 21.4 billion (and approximately Rs 13.6 billion in Q1 FY20).
Consolidated net debt (auto) increased by Rs 196 billion QoQ to Rs 678 billion.
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