For Tata Motors investors, everything is revving up rosy
₹665.40 apiece on Wednesday, propelled by better-than-expected Q1FY24 results and the recent announcement. Throughout 2023, a key factor fostering positivity in Tata Motors’ stock has been the significant enhancement in the performance of its British subsidiary, Jaguar Land Rover Automotive Plc (JLR), resulting in a more optimistic debt reduction and free cash flow (FCF) outlook. In Q1, JLR’s performance was bolstered by increased production, favourable mix, and commodity tailwinds.
The vertical’s Ebit adjusted for one-offs stood at 7.5% in Q1 versus 6.5% in Q4FY23. In Q2, JLR expects lower production and cashflow than Q1 due to the annual summer plant shutdown. However, profitability is likely to be in line with the levels seen in recent quarters.
In view of this, the company is on track to meet its Ebit margin guidance of over 6% in FY24 and sees a possibility of raising that target. JLR accounted for more than 64% of Tata Motors consolidated revenue in FY23. To be sure, there are some concerns in the India business.
The commercial vehicle (CV) segment is seeing a fall in its market share. In Q1, Tata Motors CV market share stood at 39.1% versus 41.7% in FY23. But the Ebitda margin at 9.4% was healthy, down by 70 basis points sequentially in a quarter which saw a weak volume performance.
In the passenger vehicle (PV) business, the electric vehicle (EV) segment weighed on its margin performance. The EV Ebitda margin dropped to negative 9.7% in Q1 from negative 4.9% in FY23 due to rise in lithium prices and higher marketing spends on Tiago EV for the Indian Premier League. But it augurs well that the company expects the margin profile of PV business to recover with fall in price of lithium cells and flow through of
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