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    Company Reports Tata Motors

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    ayushsonar2001

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    Company Reports Tata Motors

    Uploaded by

    ayushsonar2001
    7 views12 pages

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    COMPANY REPORTS TATA MOTORS

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    7 views12 pages

    Company Reports Tata Motors

    Uploaded by

    ayushsonar2001

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    © All Rights Reserved
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    COMPANY REPORTS

    TATA MOTORS
    CONTENTS

    1. INTRODUCTION
    2. SWOT ANALYSIS
    3. FINANCIAL INFORMATION 1
    4. LEVERAGE
    5. EBIT ANALYSIS
    6. COST OF CAPITAL
    7. COMPETITORS
    INTRODUCTION

    Tata Motors, part of the Tata Group, is one of India's leading automotive manufacturers. Founded in
    1945, the company produces a wide range of vehicles, including commercial trucks, buses, passenger
    cars, and defense vehicles. It gained global recognition with the acquisition of Jaguar Land Rover (JLR) in
    2008, expanding into the luxury vehicle segment. Tata Motors is also a market leader in India’s electric
    vehicle space, with a strong focus on sustainability and innovation. The company is committed to
    achieving net-zero emissions by 2045, driven by its advancements in EV and alternative fuel technologies
    SWOT ANALYSIS

    Strengths:

    ● Market Leadership: Dominates India’s EV and commercial vehicle segments.


    ● Global Reach: Strong global presence through Jaguar Land Rover (JLR).
    ● Innovation: Significant investments in electric vehicles and alternative fuel technologies.

    Weaknesses:
    ● Dependence on JLR: A large portion of revenue is tied to JLR, exposing it to global
    economic risks.
    ● Profitability Volatility: Susceptible to fluctuating margins due to raw material costs and
    global conditions.
    Opportunities:

    ● Growing EV Market: Strong potential in India’s rapidly expanding EV sector.


    ● Sustainability Initiatives: Focus on green technologies like EVs and hydrogen
    vehicles aligns with global trends.

    Threats:

    ● Intense Competition: Faces strong competition from both domestic and


    international automakers.
    ● Global Economic Risks: Economic downturns in key markets like China and
    Europe could affect revenues​
    FINANCIAL INFORMATION

    FY:23-24
    LEVERAGE

    Tata Motors has significantly reduced its debt in recent years, with its India automotive
    business now being debt-free as of FY24. The company is also on track to make Jaguar
    Land Rover (JLR) debt-free by FY25. As of March 2024, Tata Motors' net debt stood at
    around ₹65.9 billion, reflecting strong financial performance across its segments,
    including commercial vehicles (CV) and passenger vehicles (PV). This reduction is
    supported by strong cash flows and profitability improvements driven by its focus on
    electric vehicles (EVs) and green technologies

    Additionally, the company has been investing heavily in R&D, particularly in EVs and
    alternative fuel technologies, aligning with its goal to achieve net zero emissions by 2045
    EBIT ANALYSIS

    Tata Motors' EBIT (Earnings Before Interest and Taxes) performance for FY24 reflects strong
    operational improvement across its segments. Here's a detailed analysis:

    1. Jaguar Land Rover (JLR):


    ○ For FY24, JLR's EBIT margin was 8.5%, driven by increased vehicle volumes,
    particularly in premium models like Range Rover and Defender, and reduced
    material costs. In Q4 FY24 alone, JLR's EBIT margin was 9.2%, showing a
    significant improvement year-over-year​

    This growth is supported by strong demand for luxury vehicles and the strategic
    transformation under JLR's "Reimagine" initiative, focused on electrification and
    premium offerings​
    Commercial Vehicles (CV) Segment:

    ● Tata Motors' CV segment posted an EBIT margin of 8.2% for FY24, up from the
    previous year. The EBIT margin in Q4 FY24 was 9.6%, a 100 bps improvement,
    reflecting cost optimization, improved vehicle mix, and strong demand

    Passenger Vehicles (PV) Segment:

    ● The PV segment showed an EBIT margin of 8.4% in FY24, benefiting from


    increased EV sales and Tata’s expanding portfolio in the electric vehicle space.
    The strong market position in India’s growing EV market, with a 73% market share,
    has contributed significantly to its EBIT growth
    COST OF CAPITAL
    The overall cost of capital for Tata Motors is determined by its Weighted Average Cost of
    Capital (WACC), which accounts for both equity and debt financing costs. The cost of capital
    is influenced by the following factors:

    1. Cost of Equity: This is based on the expected returns required by equity investors.
    Given the volatile nature of the automotive industry, Tata Motors' cost of equity is
    influenced by market risks, especially with respect to its significant investments in EVs
    and its luxury vehicle segment (JLR).
    2. Cost of Debt: Tata Motors benefits from relatively low-cost debt, especially after
    reducing its net debt to ₹65.9 billion in FY24. The company’s improving financial health
    and cash flow generation contribute to more favorable borrowing terms. Tata Motors
    has reduced its leverage considerably, which lowers the risk premium on its debt​
    3. Debt-Equity Mix: As Tata Motors’ debt levels have decreased, particularly in its
    Indian automotive business, the WACC has been favorably impacted. The company is
    focusing on making its JLR business debt-free by FY25, which will further reduce its
    WACC.

    Although the exact WACC percentage varies over time due to changes in market
    conditions, interest rates, and the company's capital structure, Tata Motors' improved
    financial standing and reduced debt levels have contributed to lowering its overall cost
    of capital. For a precise number, financial analysts estimate Tata Motors’ WACC to be
    between 10% and 12% based on recent market reports​
    COMPETITORS

    Tata Motors faces competition from several key players in the automotive industry:

    1. Mahindra & Mahindra: Competes in SUVs and commercial vehicles, with a growing focus on
    electric vehicles (EVs).
    2. Maruti Suzuki: The largest passenger car manufacturer in India, known for affordable and
    fuel-efficient models.
    3. Hyundai: Offers a wide range of passenger vehicles and is expanding its EV portfolio.
    4. Kia: Rapidly gaining market share with stylish designs and competitive pricing, particularly in
    the EV segment.

    These competitors create a dynamic environment for Tata Motors as it seeks to maintain its
    market position

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