Shares of Tata Motors Limited traded 2 per cent higher at Rs 991 apiece in morning trade on June 11 after the management gave a positive outlook for the coming quarters.
Tata Motors’ UK arm Jaguar Land Rover (JLR) in its annual report for FY24 and the key takeaways included a 430 basis points year-on-year (YoY) improvement in Ebitda margins, driven by a richer product mix and operating leverage benefits. Kotak Institutional Equities said there was also an improvement in the performance of the China JV despite lower volumes, led by cost-control measures. The auto major remains well-capitalised, with debt securities well spread out; and that its pension plan remains overfunded.
The country’s largest EV player is confident of achieving financial stability by becoming net debt-free by fiscal year 2025. Additionally, the Nexon maker has set a targets of achieving a market share of over 25 percent across various segments.
Looking ahead, Tata Motors is focused on electric vehicle (EV) development, with plans to reach EV EBITDA breakeven by fiscal year 2026. Moreover, the company aims for a consolidated 10 percent EBITDA for its passenger vehicle (PV) and EV operations by fiscal year 2030, emphasising a long-term commitment to profitability and sustainability. EBITDA is earnings before interest tax, depreciation and amortization.
On the other hand, its British subsidiary Jaguar Land Rover (JLR) May sales increased by 29 percent year-on-year, reaching 6,093 units as compared to 4,732 units sold in May last year.
In the fiscal fourth quarter, the Defender maker continued its strong financial performance. JLR’s revenue for the quarter stood at 7.9 billion pounds, an 11 percent surge compared to Q4FY23 and a 6 percent rise compared to Q3FY24. Furthermore, JLR’s revenues for FY24 reached 29 billion pounds, a 27 percent increase compared to the prior year.
India’s largest four-wheeler electric vehicle manufacturer posted a staggering 222 per cent growth in its consolidated net profit in Q4FY24 at Rs 17,407.18 crore. The company’s Profit after Tax (PAT) for the same period last year stood at Rs 5,407.79 crore.
May Auto Sales
In May 2024, Tata Motors recorded total sales of 76,766 units, showing a slight uptick from 74,973 units in May 2023.
Notably, domestic passenger vehicle sales, inclusive of electric cars, witnessed a 2 per cent surge, reaching 46,697 units.
While international business experienced remarkable growth, with a 257 per cent increase, selling 378 passenger vehicles, electric vehicle sales dipped 4 per cent to 5,558 units.
The company’s domestic sales of medium and heavy commercial vehicles, including trucks and buses, stood at 12,987 units, compared to 11,776 units in May 2023.
The combined total sales for this category, including both domestic and international operations, rose to 13,532 units from 12,292 units during the same period last year.
Tata Motors: Check Target Price
Kotak said it expects Tata Motors’ FY2025-26E performance to remain healthy, led by steady JLR business performance, driven by an improvement in mix and cost-control measures, market share gains in the PV and CV segments and a net cash balance sheet by FY2025E.
“Tata Motors continued to focus on improving SUV segment product mix, with Range Rover and Defender, which contributed 79 per cent of the total sales in FY2024 (from 76% in FY2023). In addition, JLR is repositioning itself with a house of brands strategy by creating four separate brands: Range Rover, Defender, Discovery and Jaguar. The company intends to launch more premium ICE and electric SUVS under the new strategy to further improve the SUV product portfolio,” it said.
The brokerage maintained its consolidated EPS estimates for FY2025-27. It maintained an ‘Add’ rating on the Tata Motors stock with an unchanged fair value of Rs1,100, based on SoTP methodology.
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