EQUITY RESEARCH REPORT

TATA MOTORS LIMITED

Gearing up to compete , maintain buy !
CMP: 654
Target : 768
Potential target : +17.43%

About the company

About the Company Tata Motors Limited is an Indian multinational automotive manufacturing
company, headquartered in Mumbai, India, which is part of the Tata Group. The company
produces passenger cars, trucks, vans, coaches, buses, sports utility vehicles and defense
vehicles. TML has its presence in 125 countries through 104 subsidiaries, associate companies
and joint ventures, including Jaguar Land Rover in UK Tata Daewoo in South Korea. It has 25
manufacturing facilities and 6 R&D facilities worldwide. Tata Motors operates into 5 major
business segments which are Commercial Vehicles, Passenger Vehicles, Jaguar Land Rover
(Premium Luxury) & Vehicle Financing

Result summary
Tata Motors reported a net profit of ₹5,578 crore for Q3 FY25, which was a 22% decrease year-
on-year, but showed sequential growth. Revenue from operations rose by 2.7% to ₹112,833
crore. While the company's bottom line missed analyst expectations, the revenue increase
indicates a positive trend.
Here's a more detailed breakdown:
 Revenue:
Tata Motors' revenue from operations increased by 2.7% year-on-year to ₹112,833 crore.
 Net Profit:
The net profit was ₹5,578 crore, a 22% decrease compared to the previous year's ₹7,145
crore.
 EBITDA:
Consolidated EBITDA came in at ₹13,032 crore, with an EBITDA margin of 11.5%.
 Finance Costs:
Finance costs reduced by ₹760 crore to ₹1,725 crore due to a reduction in gross debt.
 JLR Performance:
Jaguar Land Rover (JLR) continued to be a strong performer, contributing to the company's
overall results.
 Commercial Vehicles (CVs):
CV revenues declined, but EBITDA margins improved, primarily due to material cost savings
and the impact of Production Linked Incentive (PLI) incentives.
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 Passenger Vehicles (PVs):

PV revenues were also down, but EBITDA margins improved, driven by cost controls and PLI
incentives.

Data for past 8 quarter financials is provided below along with QoQ (%) change :

com
Dec-22 Mar-23 Jun-23 Sep-23 Dec-23 Mar-24 Jun-24 Sep-24 Dec-24 QoQ (%)
Sales + 88,489 1,05,932 1,02,236 1,05,129 1,10,577 1,19,986 1,08,048 1,01,450 1,13,575 3%
Expenses + 77,668 92,818 89,019 91,362 95,159 1,02,851 92,263 89,291 1,00,532 6%
Operating Profit
10,820 13,114 13,217 13,767 15,418 17,135 15,785 12,159 13,043 -15%
OPM % 12% 12% 13% 13% 14% 14% 15% 12% 11% -21%
Other Income + 1,130 1,453 895 1,557 1,604 1,619 1,747 1,647 1,764 10%
Interest 2,676 2,642 2,615 2,652 2,485 2,234 2,088 2,034 1,725 -31%
Depreciation 6,072 7,050 6,633 6,637 6,850 7,151 6,574 6,005 5,408 -21%
Profit before tax3,203 4,875 4,864 6,035 7,687 9,369 8,870 5,767 7,674 0%
Tax % 8% -13% 32% 36% 7% -87% 36% 40% 27% 286%
Net Profit + 3,043 5,496 3,301 3,832 7,145 17,529 5,692 3,450 5,578 -22%
EPS in Rs 8.91 16.28 9.64 11.33 21.14 52.37 16.74 9.08 14.81 -30%

Data for shareholding pattern for past 8 quarters is provided below :

Mar-23 Jun-23 Sep-23 Dec-23 Mar-24 Jun-24 Sep-24 Dec-24 Mar-25

Promoters + 46.39% 46.39% 46.38% 46.37% 46.36% 46.36% 42.58% 42.58% 42.58%
FIIs + 15.34% 17.72% 18.40% 18.62% 19.20% 18.18% 20.54% 18.66% 17.84%
DIIs + 17.69% 17.38% 17.37% 17.25% 16.01% 15.93% 16.08% 16.54% 16.88%
Government + 0.14% 0.14% 0.14% 0.14% 0.14% 0.14% 0.29% 0.31% 0.31%
Public + 20.41% 18.38% 17.70% 17.60% 18.31% 19.39% 20.49% 21.91% 22.39%

Data for CCC ratios for past 5 years is provided below :

Mar-19 Mar-20 Mar-21 Mar-22 Mar-23 Mar-24

Debtor Days 23 16 19 16 17 14
Inventory Days 73 82 83 71 66 64
Days Payable 133 145 175 141 128 126
Cash Conversion Cycle -38 -48 -74 -53 -45 -48
Working Capital Days -53 -68 -48 -32 -24 -24
ROCE % 2% 0% 6% 1% 6% 20%

KEY HIGHLIGHTS FROM DATA

 QoQ sales has been increased approx. 3% but it should be noted that net profit has been
Decline due to increase in expenses and taxes.
 There is increase in ownership control by DII and public investor stake in company followed
by decline in stake of FII
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 There is decline in Cash conversion cycle due to decrease in inventory days indicating strong
demand for inventory .
 Return on capital employed has been increased drastically indicating strong performance of
company .

Profit and loss statement of last 5 years

Mar-19 Mar-20 Mar-21 Mar-22 Mar-23 Mar-24

Sales + 3,01,938 2,61,068 2,49,795 2,78,454 3,45,967 4,37,928
Expenses + 2,77,274 2,43,081 2,17,507 2,53,734 3,14,151 3,78,389
Operating Profit 24,664 17,987 32,287 24,720 31,816 59,538
OPM % 8% 7% 13% 9% 9% 14%
Other Income + -26,686 102 -11,118 2,424 6,664 5,673
Interest 5,759 7,243 8,097 9,312 10,225 9,986
Depreciation 23,591 21,425 23,547 24,836 24,860 27,270
Profit before tax -31,371 -10,580 -10,474 -7,003 3,394 27,955
Tax % -8% 4% 24% 60% 21% -14%
Net Profit + -28,724 -11,975 -13,395 -11,309 2,690 31,807
EPS in Rs -99.84 -39.08 -40.51 -34.46 7.27 94.47
Dividend Payout % 0% 0% 0% 0% 32% 7%

Balance sheet for last 5 years

Mar-19 Mar-20 Mar-21 Mar-22 Mar-23 Mar-24

Equity Capital 679 720 766 766 766 766
Reserves 59,500 62,359 54,481 43,795 44,556 84,152
Borrowings + 1,06,175 1,24,788 1,42,131 1,46,449 1,34,113 1,07,262
Other Liabilities + 1,39,349 1,32,313 1,44,193 1,38,051 1,55,239 1,77,340
Total Liabilities 3,05,703 3,20,179 3,41,570 3,29,061 3,34,674 3,69,521
Fixed Assets + 1,11,234 1,27,107 1,38,708 1,38,855 1,32,080 1,21,285
CWIP 31,884 35,622 20,964 10,251 14,274 35,698
Investments 15,771 16,308 24,620 29,380 26,379 22,971
Other Assets + 1,46,814 1,41,141 1,57,278 1,50,575 1,61,941 1,89,566
Total Assets 3,05,703 3,20,179 3,41,570 3,29,061 3,34,674 3,69,521

Cash flow statement for last 5 years is given below :

Mar-19 Mar-20 Mar-21 Mar-22 Mar-23 Mar-24

Cash from Operating Activity + 18,891 26,633 29,001 14,283 35,388 67,915
Cash from Investing Activity + -20,878 -33,115 -25,672 -4,444 -15,417 -22,782
Cash from Financing Activity + 8,830 3,390 9,904 -3,380 -26,243 -37,006
Net Cash Flow 6,843 -3,092 13,232 6,459 -6,272 8,128
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financial Performance:

 Q3 FY25 Results:
 Revenue increased by 2.7%, reaching ₹18,400 crores.
 EBIT improved by 60 bps, with a PBT of ₹22,300 crores, up nearly ₹3,000 crores
year-on-year.
 Free cash flow recorded at ₹4,700 crores, with net debt closing at ₹19,200 crores.
 Significant EBIT contribution from JLR, increasing from 8.3% to 8.9%.

Growth Drivers:

 Volume and Mix:

 Growth attributed to improved volume and mix, aided by recent rupee depreciation.
 Domestic Indian business returned to net cash status at ₹700 crores.

Corporate Actions:

 Demerger Progress:
 Demerger progressing well, expecting NOC from Stock Exchange and SEBI soon.
 Appointed date anticipated as July 1, with an effective date likely in October 2025.
 Production-Linked Incentives (PLI):
 Received eligibility certificate, with cash claims of ₹142 crores for the previous year
fully received.
 Additional accruals of ₹209 crores recorded for PLI.

Jaguar Land Rover (JLR) Performance:

 Q3 Highlights:
 Achieved highest Q3 revenue of GBP 7.5 billion, with a wholesale volume of 104,000
units.
 EBIT margin at 9%, marking the highest in a decade.
 Positive cash flow maintained, despite challenges in the market.
 Regional Performance:
 China sales decreased as the company normalized retailer stock; however, U.S.
sales showed a 25% year-to-date increase.
 Profitability Insights:
 PBT decreased from GBP 627 million to GBP 523 million, with a strong mix of higher-
margin vehicles (Range Rover, Defender).
 Warranty costs increased, impacting profitability, but management is focused on
quality improvements.

Commercial Vehicles (CV) Segment:

 Market Share and Performance:

 YTD performance indicates improved market share in trucks and passenger
vehicles, despite a drop in small commercial vehicles (SCV) market share.
 Q3 revenue for CV at ₹18,400 crores, an 8.4% decline year-on-year, but margins
improved due to cost-saving measures and PLI benefits.
 Segment Performance:
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 Bus and van segments grew 11% year-on-year; heavy commercial vehicles saw a
decline of 9% but improved quarter-on-quarter.
 Increased utilization trends and freight rates observed.

Passenger Vehicles (PV) Segment:

 Sales and Market Strategy:

 Record retail sales during Q3, attributed to festive season and strong marketing
campaigns.
 Increased market share by 0.7%, with a notable focus on the SUV portfolio,
particularly the Nexon CNG and Curvv.
 EV penetration increased to 24%, with overall EV off-takes growing by 15%.
 Financials:
 Q3 revenue for PV increased from ₹11,700 crores to ₹12,400 crores.
 EBITDA margins for PV and EV combined at 7.8%, with a significant impact from
PLI approvals.

New Developments:

 Product Launches:
 Successful launch of the all-new Tata Sierra and Harrier EV showcased at the Auto
Expo.
 Introduction of new battery electric vehicles and hydrogen internal combustion
engine trucks.
 Digital Transformation:
 Fleet Edge platform now has over 760,000 active vehicles, with significant customer
engagement.
 E-Dukaan for spares and Fleet Verse for online vehicle sales are both growing
rapidly.
 Sustainability Initiatives:
 Achieved Zero Waste to Landfill Certification at the Lucknow plant.
 Continued focus on decarbonization strategies and circularity initiatives.

Industry Outlook:

 Market Trends:
 Management optimistic about gradual improvement in domestic demand driven by
infrastructure spending and product launches.
 JLR anticipates improved wholesales in Q4, contingent on retail growth.
 Challenges:
 Management remains cautious regarding demand in China and the overall
macroeconomic environment.
 Focus on maintaining dealer inventory levels to support retailer margins, especially
in challenging markets like China.

Summary:

 Overall, Tata Motors displays a strong performance across segments, with

significant growth drivers in EV and CV sectors, while also navigating challenges in
specific markets. The management remains confident about future growth, backed
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by new product launches and strategic initiatives in sustainability and digital

transformation.

Geographical breakdown
Geographical Breakdown In FY24, volume and percentage of revenues outside India have
improved from FY23 levels. The revenue of Jaguar Land Rover increased across most
geographical markets in FY24. Jaguar Land Rover wholesale volumes increased in all
regions including in the UK (increased 33%), in North America (increased 29%) and, in
China (increased 17% year on-year) and Europe (increased 9%) in FY24. We are present
across the Globe with well diversified product portfolio.

SEGMENT BREAKDOWN
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