Tata Motors rallied 782% the past 5 years. Is the stock still worth buying?
Tata Motors Ltd, which has returned a market-thumping 782% over this period, creating significant shareholder wealth. The outperformance has continued in 2024 as well, with Tata Motors’ share price rising 36%, compared to the Nifty 50 index’s gain of 11.9%. If you had invested ₹50,000 in Tata Motors stock in August 2019 it would be worth roughly ₹440,000 today.
Valued at a market cap of ₹3,82,500 crore, Tata Motors is among the largest automobile companies in India. But as past returns don’t matter much for current and potential investors, let’s analyse if the automobile giant can continue its impressive rally. Tata Motors has undergone a significant transition in recent years.
The company traditionally manufactures and sells passenger cars, commercial vehicles, pickups, buses, vans, and trucks. In recent years, it has expanded to include electric vehicles, and is among India’s largest manufacturers of EVs. Generally, a company’s share price performance is tied to its revenue and earnings growth.
Tata Motors’ sales increased from ₹2,64,041 crore in fiscal year 2020 to ₹4,43,878 crore in FY 2024, indicating a compounded annual growth rate of almost 11%. While it reported a net loss of ₹10,975 crore in 2020, its net income stood at ₹31,807 crore in 2024. In the latest June quarter, Tata Motors’ net income increased 72% year-on-year to ₹5,692 crore.
Revenue rose 6% to ₹1,09,623 crore. The company’s Ebitda in the first quarter rose 19% to ₹15,785 crore, while its margin expanded by 170 basis points to 14.6%. Sales from its Jaguar Land Rover divisiongrew 5.4% to £7.3 billion, while its Ebit margin improved by 30 basis points to 8.9%.
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