Tata Motors Ltd’s EBITDA up 326% YoY to 13,560 Cr
Company Overview:
Tata Motors Group, a prominent global automobile manufacturer, boasts a diverse product portfolio encompassing cars, sports utilities, trucks, buses, and defense vehicles. The company holds a commanding presence in commercial vehicles (CV) and electric vehicles (EV), ranking third in personal vehicles (PV). Tata Motors commands a substantial market share, with 39% in CV and 35.5% in PV, positioning it as a market leader.
Geographic Presence and Manufacturing Sites:
Tata Motors’ global reach extends across 125 countries, including key markets in North America, Europe, the UK, India, and China. The company’s extensive global network comprises subsidiaries, associate companies, and joint ventures, such as Jaguar Land Rover in the UK and Tata Daewoo in South Korea. With 15 manufacturing sites in India and an additional 10 abroad, Tata Motors demonstrates a robust global manufacturing footprint. Furthermore, the company operates 8 research and development (R&D) facilities, with three situated in India.
Business Performance Across Segments:
Jaguar Land Rover (JLR) experienced a noteworthy performance in Q1FY24, with revenue surging by 57% YoY to 6.9 billion. This growth can be attributed to increased volume, pricing adjustments, and favorable foreign exchange revaluation. Despite inflation and supplier claims, profitability improved, with EBIT margins rising by 200 bps QoQ to 8.6%. A strong order book, standing at 185k units, underscores promising future earnings prospects, with Range Rover, Range Rover Sport, and Defender representing a significant share.
In the Commercial Vehicles (CV) segment, Q1FY24 witnessed a 4.4% YoY revenue increase to 17k Cr, primarily driven by an improved product mix and better market operating prices, offsetting volume decreases. Despite domestic wholesale and retail volume drops of 14.1% and 14.3% YoY, respectively, robust EBITDA and EBIT margins of 9.4% (+390 bps QoQ) and 6.5% (+370 bps QoQ) were reported.
Passenger Vehicles (PV) demonstrated positive results in Q1FY24, with revenue up 11.1% YoY to 12.8k Cr, driven by improved pricing and robust demand. PV volumes showed growth in both wholesale and retail, increasing by 7.6% and 6.1% YoY, respectively, reaching 140k units and 132.5k units. EBITDA margins were impacted by a higher mix of EVs and increased fixed expenses, dropping by 80 bps YoY to 5.3%, while EBIT margins increased by 10 bps to 1%, thanks to operating leverage.
Valuation and Key Ratios:
Tata Motors’ stock is currently trading at 20.5 times FY23 EPS of 32 Rs, with a market price of 620, while the industry PE stands at 32.3. The stock is valued at 4.5 times its book value of 136. Notably, the company reports a favorable interest coverage ratio of 2.13, indicating double the earnings compared to interest costs. The EV/EBITDA ratio stands at 6.78x.
Q1FY24 Results Update: Consolidated
Consolidated revenue surged by an impressive 42% YoY to 102.2k Cr, primarily driven by improvements in the JLR and CV segments, while the PV segment remained steady. EBITDA witnessed a remarkable 326% YoY increase (+6% QoQ) to 14.7k Cr, attributed to operating leverage. EBITDA margins climbed by 700 bps YoY to 14.4% and increased by 120 bps QoQ. EBIT recorded a remarkable 360% YoY growth (+20.5% QoQ) to 8.3k Cr, with EBIT margins rising by 140 bps QoQ and a staggering 1047 bps YoY. Despite a decline of 40.8% QoQ, PAT increased by 164% YoY to 3.2k Cr, with PAT margins decreasing by 190 bps to 3.1%. The EPS for the quarter stood at 8.4 Rs, compared to the previous quarter’s 14.1 Rs.
Conclusions:
Tata Motors Group’s performance in Q1FY24 demonstrates significant growth in revenue and profitability across its key segments. The company’s strong market presence and strategic global footprint, along with favorable financial ratios, suggest a promising outlook. However, it’s crucial to monitor factors such as inflation and the evolving EV landscape as they may impact future performance and valuation.
