IGI Logo

Near term blips to impact growth momentum

Valuation and View

TTMT’s 4QFY22 were operational beat with consol EBITDA higher by ~18% at Rs87.4b as margins expanded ~170bp QoQ at 11.1% (est 9%). Segmentally, JLR results were inline while S/A exceeded estimates led by better than expected margins at CVs 5.9% (+330bp) and PVs at 6.9% (+370bp QoQ). Several internals surprised positively such as reduction in net auto debt to Rs487b in 4Q (v/s Rs604b in 3Q and Rs644b in 2QFY22) and ~40bp QoQ improvement in VME to 0.9%. Some of these variable may moderate in near-term as 1QFY23 to see dual impact of ongoing chip shortages compounded by 1)UKRussia tension (<2.5% of sales) and 2) recent China lockdowns impacting both sales and component supplies. However, strong order backlog at ~168k units (v/s ~155k in 3Q at JLR) and cost control to help partially dilute the impact

TTMT continue to remain our top pick, given its improving India franchise, early leadership in EVs in India, and JLR’s aggressive cost controls. Standalone business is in sweet spot led by healthy cyclical recovery both in PV and CV whereas favorable product cycle to help drive JLR outperformance. The recent valuations contraction make TTMT even more attractive play among OEMs. We cut FY23/24 EPS by ~9% each to factor in recent global headwinds and estimate revenue/EBITDA CAGR of 14%/29% in FY22-24E. We maintain BUY with TP of Rs520 (v/s Rs565 earlier).

Result Highlights- Healthy margins delivery despite RM pressure

* Consol revenue declined 11.5% YoY/ (+8.6% QoQ) at Rs784.4b (in line v/s our/street est).

* Gross margins contracted 150bp QoQ at 34.7% led by RM inflation. > This was offset by op leverage and cost control resulting in EBITDA beat at Rs87.4b (+29% QoQ, est at Rs73.8b, cons at Rs85.6b). Consequently, margins expanded 170bp QoQ at 11.1% (est at 9%, cons at 10.6%).

* Better op performance coupled with higher other income at Rs9b (est at Rs7b) led Adj PAT loss of Rs2.2b (v/s loss of Rs14.8b in 3QFY22, est loss of Rs4.3b v/s consensus PAT at Rs0.7b).

* JLR margins beat est by 140bp- 4QFY22 dispatches grew ~7% QoQ, revenues of GBP 4.8b (+1% QoQ) with margins at 12.6% (+60bp QoQ, est at 11.2%).

* CV- Revenue grew ~34% QoQ at Rs185b with margins at 5.9% (+330bp QoQ). PV- Revenue grew ~24% QoQ at Rs105b with record margins at 6.9% (+370bp QoQ).

* Consol net Auto debt at Rs487b (v/s Rs604b in 3Q and Rs409b in FY21), largely led by working capital impact

To Read Complete Report & Disclaimer Click Here

Please refer disclaimer at https://yesinvest.in/privacy_policy_disclaimers
SEBI Registration number is INZ000185632

Above views are of the author and not of the website kindly read disclaimer