Weaker-Than-Expected JLR Q2 Sales Spark Downside Risks, Says Nomura


Tata Motors Ltd.’s British luxury carmaker missing sales guidance in the second quarter, mainly because of supply-chain constraints, has increased downside risks to Nomura’s FY23 volume estimates.

“Wholesale volumes for Q2 FY23 were 75,300 units (excluding China JV), up 5% quarter-on-quarter. Lower-than-expected supply of specialised chips negatively impacted wholesale volumes during the quarter, resulting in Jaguar Land Rover missing its guidance of 90,000 for Q2 FY23,” the research firm said in an Oct. 9 report. The retail sales rose 12% sequentially.

Although JLR volumes improved sequentially, the management’s guidance was missed. This, Nomura said, has increased downside risks to its FY23 volume estimate of 4,14,000 units (excluding China JV) as H1 FY23 volume came in at only 1,47,000 units.

On Friday, JLR, a wholly owned subsidiary of Tata Motors, saw sales decline 4.9% year-on-year to 88,121 units during the quarter ended September. Sale of Jaguar cars declined 9.9% to 17,340 units, while Land Rover saw a 3.6% decline at 70,781 units.

Still, JLR expects the free cash flow to be close to breakeven despite the weaker wholesale volume during the quarter based on its preliminary total cash balance of £3.7 billion (Rs 33,777 crore), Nomura said. “It expects free cash flow for H2 FY23 to be positive, driven largely by sequential growth in wholesale volumes.”

According to Nomura, Tata Motors was able to ramp up production of the New Range Rover and New Range Rover Sport models—the demand for which lifted the company’s total order book to 205,000 units as of September, up 5,000 units from June.


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