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IndiaTata Motors: Positives fully priced in, analysts still upgrading the stock

Tata Motors: Positives fully priced in, analysts still upgrading the stock


N L Correspondent

There is no impediment to normal operations as Tata Motors puts in place the demerger process of its commercial and passenger vehicles businesses.

Instead, the demerger would provide greater manoeuvrability for both new entities to operate independently, according to Tata Motors management.

While there may not be immediate value unlocking, it will give investors clarity about future growth and the financials across different segments.

Globally, volume recovery in Jaguar Land Rover (JLR) suggests there is likely to be strong growth in revenue, profitability, and free cash flow (FCF).

There is also a focus on grabbing market share in the domestic passenger vehicle (PV) segment through new model launches and higher electric vehicle (EV) penetration, where Tata Motors has a dominant market-share.

JLR s wholesale numbers (excluding the China joint venture) for the January-March quarter (Q4) of FY24 came out at 1,10,190 units (up 9 per cent quarter-on-quarter (Q-o-Q) and 16 per cent year-on-year (Y-o-Y)) which is in line with consensus.

In Q4FY24, JLR may report revenue of GBP 7.9 billion with average selling price (ASP) of GBP 72,000 per unit and Ebitda of GBP 1.3 billion (margin of around 16.8 per cent).

The FCF generated is expected to cross GBP 700 million equivalent in Q4 (Q3FY24 FCF was around GBP 650 million). The improvement will be due to higher Ebitda on Q-o-Q basis (operating leverage) and another GBP 200-300 million FCF as working capital normalises with better production levels.

Overall FCF of GBP 2.1 billion in FY24 could come in from JLR with net debt for JLR to reduce to GBP 900 million by end-FY24 (from GBP 1.6 billion in December 2023). The company is confident that the domestic PV will be self-sustaining going forward after the demerger of the CV business.


The Northlines is an independent source on the Web for news, facts and figures relating to Jammu, Kashmir and Ladakh and its neighbourhood.

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