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ICICI Securities Report
Despite limited wholesale volume of ~69,000 (up ~10% QoQ) units led by chip shortage, Tata Motors Ltd.'s Jaguar Land Rover managed Q3 FY22 pretty well to focus on higher margin models like Range Rover (39% mix, up 900 basis points QoQ) to deliver ~300 bps QoQ better Ebitda margin at 12%.
Thus, with limited capex (£~0.5 billion) and improved profitability, JLR was able to generate positive free cash flow of £164 million and in turn help Tata Motors reduce net auto debt by Rs 40 billion QoQ to Rs 600 billion.
With production improving, we expect mix to normalise, resulting in rationalisation in realisation and gross margin.
Also, with better production, we expect scope for reversal in JLR working capital by ~£1.4 billion across FY23E.
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