Tata Motors Q4 Results Review - Bullishness Reloaded, Firing On All Cylinders: ICICI Direct

ICICI Direct Report

Tata Motors Ltd. reported healthy Q4 FY23 results. Consolidated total operating income was up 19.7% QoQ at Rs 1,05,932 crore. Ebitda margins were at 14.7%, up 87 basis points QoQ.

Consolidated profit after tax was at Rs 5,408 crore (FY23: profit after tax positive; after five years). Tata Motors' Ebitda margins in Q4 FY23: Jaguar Land Rover: 14.6%, Indian commercial vehicle: 10.1% and India passenger vehicle: 7.3%.

Key triggers for future price performance:

• We expect healthy 20.1% revenue compound annual growth rate over FY23-25E driven by 10% total volume CAGR amid healthy wholesale visibility on the JLR front.

• Demonstrated capability in newer technologies in CV space and pricing discipline across industry to aid aspiration of double-digit margins ahead.

• Dominant position in domestic electric-PV space with 80% plus market share.

• Firmer commitment towards electric vehicle by JLR with accelerated investment plan of £15 billion spend over the next five years coupled with healthy free cash flow generation target of £2 billion and net debt reduction to less than £1 billion by FY24E.

• Intent to go auto net debt free (most likely in FY25) though healthy cash flow from operation generation and sale of non-core assets (including stake sale in Tata Tech).

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