Tata Motors Closes Record Year with Strong Q4 Performance

Tata Motors (NS:TAMO) capped off a record year with a stellar performance in the fourth quarter, according to a recent report by Jefferies. The company’s Q4 EBITDA surged 33% year-over-year (YoY) and 11% quarter-over-quarter (QoQ), reaching new highs in line with Jefferies’ estimates. This robust growth was reflected across its segments, with EBITDA rising between 10% and 23% QoQ for Jaguar Land Rover (JLR) and India’s commercial and passenger vehicles (CV/PV). Additionally, Tata Motors significantly reduced its net automotive debt by 45% QoQ to a six-year low of INR 160 billion.

JLR continued to excel, posting a 12% YoY increase in wholesales and a 24% YoY rise in EBITDA. The EBITDA margin improved by 20 basis points QoQ to 16.3%. Higher-margin models like the Range Rover, Range Rover Sport, and Defender now constitute 55-60% of volumes and 76% of the order book, underscoring JLR’s robust business cycle.

Offer: Transform your investment strategy with InvestingPro! Access top-tier stock analysis and intrinsic value calculations. Click here to grab the limited-time offer: 69% off, only INR 216/month!

Despite challenges such as rising customer acquisition costs, JLR benefits from expanded capacity, lower chip costs, and material cost improvements. With an order backlog of 133,000 units, nearly three times the monthly volume, JLR is well-positioned for FY25. The company anticipates a flat EBIT margin YoY at 8.6% and aims for zero net debt in FY25, compared to £0.7 billion in FY24.

In India, the growth of the truck industry has slowed, with Tata projecting flat-to-slightly declining volumes for FY25, though Jefferies expects a 5% increase. Tata’s market share dipped to 47% in early FY24 but rebounded to 50% in the second half. The passenger vehicle market is also facing demand concerns, with Tata predicting less than 5% industry growth for FY25, although Jefferies forecasts 7%. Notably, Tata’s SUV segment, which accounts for 65-70% of its volumes, is expected to remain robust. The upcoming launch of the Curvv mid-sized SUV in late 2024 should provide a significant boost.

Jefferies fine-tuned its estimates for Tata Motors, projecting FY25-26 EPS to be 12-14% above consensus. Over FY24-26, Jefferies anticipates a 13% CAGR in EBITDA and a 23% CAGR in EPS, with a net cash balance of $4.6 billion by FY26. Consequently, Jefferies maintains a ‘Buy’ rating on Tata Motors with a revised price target of INR 1,250, reflecting a 29.6% upside.

This optimistic outlook is underpinned by expectations of continued strong performance in JLR, moderate growth in India’s CV volumes, and a significant upswing in PV volumes and margins. Tata Motors remains well-placed to navigate industry challenges and leverage upcoming opportunities, making it a compelling investment choice in the automotive sector.

Image Source: InvestingPro+

But as usual, we will go to our favorite tool - InvestingPro to see what the stock is actually worth. Its fair value feature calculates the intrinsic value from various financial models to arrive at a more realistic value. In this case, a total of 14 models have been used to arrive at the fair value of INR 1,200, which is a decent upside potential of 24.5%, from the CMP of INR 964.5. This is almost in line with what Jefferies thinks in an ideal scenario.

Limited-Time Offer: Unlock your investing potential with InvestingPro! Get precise stock analysis and calculate intrinsic values effortlessly. Click here and subscribe now at 69% off for just INR 216/month!

Read More: Decoding Stock Valuation: A Guide to Investing with Fair Value

X (formerly, Twitter) - Aayush Khanna

Begin trading today! Create an account by completing our form

Privacy Notice

At One Financial Markets we are committed to safeguarding your privacy.

Please see our Privacy Policy for details about what information is collected from you and why it is collected. We do not sell your information or use it other than as described in the Policy.

Please note that it is in our legitimate business interest to send you certain marketing emails from time to time. However, if you would prefer not to receive these you can opt-out by ticking the box below.

Alternatively, you can use the unsubscribe link at the bottom of the Demo account confirmation email or any subsequent emails we send.

By completing the form and downloading the platform you agree with the use of your personal information as detailed in the Policy.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 70.8% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

Back to top

Office network

One Financial Markets is the trading name of Axi Financial Services (UK) Ltd, a company registered in England with company number 6050593. Axi Financial Services (UK) Ltd is authorised and regulated by the Financial Conduct Authority in the UK (under firm reference number 466201) and the Financial Sector Conduct Authority in South Africa (with FSP number 45784).

The information on this site is not directed at residents of the United States, Belgium, Poland or any particular country outside the UK and is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

www.onefinancialmarkets.com is owned and operated by Axi Financial Services (UK) Ltd.

Award winning broker
We have been presented with a number of awards that recognise the quality of our service and dedication to our clients :

Best FSA Regulated Broker
Saudi Money Expo

Best Education Product
Saudi Money Expo

Best Broker - Online Trading
IAIR Awards

Best Institutional Broker
Saudi Money Expo

Best FX Services Broker
CN Forex

Top International
FX Broker 2015

Saudi Money Expo

Broker of the Year
Online Trading – Middle East

IAIR Awards

Best Forex
Customer Service 2018

JFEX Awards

We accept the following payment methods: