Tata Motors is an Indian, multinational automotive company that primarily manufactures and sells passenger cars, trucks, vans, buses, sports cars, et cetera. It is also invested in outsourcing services to the automobile sector.
Company’s Wealth and PerformanceQ1 FY 2018-19
The key financial highlights of the company’s consolidated performance in the Q1 FY 2018-19, ended 31 June 2018 are as follows:
- The net revenue recorded an increase of 14% from the previous year and stood at Rs.67,081 crore.
- EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) reported an increase of 7.5%.
- The Profit After Tax (PAT) stood at Rs.1,863 crore.
- The company recorded a growth of 64% in its domestic sales that stood at 164,579 units as against 100,141 units over previous year.
The key financial highlights of the company’s standalone performance in the Q1 FY 2018-19, ended 31 June 2018 are as follows:
- The net revenue stood at Rs.16,803 crore and reported an increase by 83%.
- The Profit Before Tax (PBT) stood at Rs.1,464 crore that included the dividend income of Rs. 1,310 crore.
- The PAT for the quarter stood at Rs. 1,188 crore.
- The wholesales were up 59% to 176,868 units. Commercial vehicles sales were up 63% on a low base and private vehicles were up 49%.
- In August 2018, Tata Motors sales in the domestic market grew by 27%, at 58,262 units compared to 45,906 units over previous year.
The key financial highlights for the company’s standalone performance in the full FY 2017-18 are as follows:
- The net revenue recorded an increase of 32% and stood at Rs.58,457 crore.
- The PBT stood at a negative point of -Rs.947Cr as it included “Fit for Future” exceptional/additional charges of Rs.1,229 crore.
- The company reported a positive free cash flow of Rs.1,339 Cr in FY 2018 after 5 years.
- The company gained market share in the commercial vehicle segment after 7 years and second year in a row for private vehicles.
- The free cash flow for the full year 2017-18, was negative and stood at Rs.11,191 crore. It indicated that the company had higher investments, lower operating profits and unfavourable working capital. The closing net debt was Rs.39,977 crore as against Rs.27,485Cr in 31 March 2017.
- Retail sales recorded an increase of 1.7% YoY to 614,309 cars. The demand was high in China North America and other overseas markets.
- In Q4 FY 2017-18, the revenue increased by 45% and stood at Rs.19,779 crore.
- For the full FY 2017-18, finance costs and tax increased by Rs.444 crore, making the total amount to Rs.4,682 crore. The increase was mainly due to higher borrowings in Tata Motors Limited and Jaguar Land Rover.
- The net profit from joint ventures and associates contributed Rs.2,278 crore as against Rs. Rs.1,493 crore in FY 17.
- Other income stood at Rs.889 crore versus Rs.755 crore in the prior year.
- Tata Motors Group released its consolidated financial statement for the Q3 FY18. It was stated in the report that the net revenue for the third quarter had increased to Rs.74,156 crore, from Rs.64,943 crore in Q3 FY17. This translates into a 16.1% increase over last year.
- In terms of sale of wholesale units, a total of 3,32,911 units were sold globally - a 15.6% increase from the same quarter last year.
- The company has done exceptionally well in terms of profit as well. Its consolidated net profit after tax (PAT) for the quarter is Rs.1,215 crore, in contrast to Rs.112 crore in Q3 FY17, which means that their net profit after tax increased by 99% in just one year. Tata Motors’ EBITDA margin also rose by 190 basis points.
- Jaguar Land Rover, a subsidiary of Tata Motors, reported a 14.2% increase in unit sales in China and 18.2% improvement in the overseas market.
- As for the free cash flow for the third quarter, it was reported to be at negative Rs.5,159 crore owing to higher investments, lower operating profits, and an increase in working capital in Jaguar Land Rover.
Other key highlights of the company in FY 2018-19
- Tata Motors unveiled the much-acclaimed SUV ‘Tata Harrier’ at Auto Expo 2018 in July.
- The company launched an extensive range of small and light commercial vehicles in Paraguay.
- The company picked up a 26% stake in a tech-based freight aggregator called TruckEasy.
- In May, Tata Motors signed an MoU for deployment of 1,000 EVs across its range of passenger and commercial vehicles.
- The opening price of the stock at the beginning of January 2018 was Rs.430 on NSE. The scrip kept falling throughout the month and stood at Rs.395 by the end. In February, the price of the stock fell further by 30 points and ended the month at Rs.370. The scrip continued its downfall in the month of March and fell by another 30 points and stood at Rs.331. In April, the scrip reached till Rs.362 but fell towards the end of the month.
- The price of the stock continued to fall further in the month of May. The opening price of the stock by the end of May was Rs.289. In June, the stock price picked up the pace and reached Rs.310 by mid-June. However, it fell towards the end of the month and stood at Rs.265. The scrip was stable in the month of July and stood at Rs.268. In the month of August, the scrip reached Rs.270 and ended the month at Rs.259.
Tata Motors Stock Returns in 2016 and 2017
- Tata Motors share price at the start of 2016 was hovering around Rs.400 on NSE and BSE. However, over the course of the next couple of weeks, the share price went as low as Rs.300, driven by weak sales in December and January, clarification sought by the exchange, and a weak Q3 FY16. On February 11, 2016, the closing price of Tata Motors was Rs.276.35.
- By early March, Tata Motors stock price had recovered and crossed Rs.300, driven by an increase in sales of commercial vehicles across the world and Jaguar Land Rover sales, particularly in the US market. Tata Motors Limited also bagged the contract to deliver 25 hybrid buses to MMRDA. By early April, the stock price was hovering around Rs.380.
- The launch of Tata Tiago in early April, followed by reporting of global wholesales and other events helped the stock price cross Rs.400 on BSE and NSE.
- After the Q4 FY16 results were announced, the stock price of Tata Motors soared beyond Rs.450 owing to strong Jaguar Land Rover sales. In fact, the share price managed to hit a new 52-week high during this time.
- By July, the share price was moving close to Rs.500, on the back of a record sales growth of 8% in June. These robust sales and the outcome of committee meeting drove the Tata Motors stock price to cross Rs.500.
- The uptrend was sustained in the month of August as well, when the automotive giant reported a sales growth of 7% in July. Tata Motors’ Jaguar Land Rover subsidiary did exceptionally well in the period, considering that it managed to achieve best sales number in July. Post Q1 FY17 results, the stock price crossed Rs.520.
- By early September, the stock price had crossed Rs.550, galvanized by strong sales in August. The same trend was observed in the month of October as well, when Jaguar Land Rover sales soared across the globe.
- However, post Q2 FY17 results, the share price tumbled and Tata Motors stocks were now being traded around Rs.450. It ended the year at Rs.472.
- Starting in January 2017, the stock price recovered well owing to robust sales in December and the signing of a three-year pact with Castrol globally. The appointment of additional director and chairman also did well to boost investors’ confidence.
- These positive cues didn’t help the stocks stabilise around Rs.500. Following the release of Q3 FY17 results, which proved to be highly disappointing for investors, the share price slid once again, only to be traded around Rs.460.
- This was roughly the case till May, when the stock price went below Rs.450 after Jaguar Land Rover reported a 2.3% drop in sales in April. In addition to this, overall Tata Motors sales took a dive as well.
- However, this did not shake the morale of investors. Tata Motors stocks were being traded close to Rs.450 in the anticipation of Q4 results. When the results were announced in late May, investors were greeted with positive news when Q4 results proved to be better than the estimates.
- Up until August, the stock price did not deviate considerably. Things took a turn for the worst when Q1 FY18 results were announced. The disappointing quarter, coupled with Tata Motors Limited terminating the Volkswagen deal, led the stocks to be traded at less than Rs.400.
- By the end of the year, block deal, launch of urban edition Hexa, increase in Jaguar Land Rover sales and positive global cues took the stock price beyond Rs.400.
Should you invest in Tata Motors Limited?
- Tata Motors Limited is one of the leading commercial vehicle and passenger vehicle brands in the world. Their product line is constantly improving which is slowly making it a preferred choice in the cars segment among the middle class.
- The company’s growth is driven by innovation in the field of technology and design. Tata Motors has been working on the hybrid technology for quite some time now and has already implemented the same across its vehicle categories. Furthermore, the changes made in the company at a fundamental level have already started to achieve the desired results, as seen in the results of the current financial year.
- The automobile giant has reported healthy numbers in its Q3 FY18 results, including a convincing increase in revenue. A majority of this revenue stemmed from the Asian markets like India and China. This was further reflected in an increase in EBITDA margin for both - Jaguar Land Rover and Tata Motors (Standalone). Needless to mention, the company’s financial track record is exceptional and after reporting a profitable growth even in adverse conditions, it is evident that Tata Motors can be trusted to generate consistent returns in the long run.
- At the same time, there are other automobile companies in the sector which have the potential to generate greater returns in the long term. Ashok Leyland is one such brand, simply because it is considered to be more reliable. It is advisable to look at the performance of the two companies over the years and then arrive at an informed decision.
Tata Motors, a part of the Tata Group, is one of the largest automobile manufacturing companies in the world. Their clientele is spread across more than 170 countries and the products comprise passenger vehicles, sports cars, buses, defence vehicles, trucks, automotive parts and many more. The company is reliant on its innovation-driven technology with the hope of delivering better mobility solutions in the field of automobiles. Their leading subsidiaries are Jaguar Land Rover, Tata Daewoo, and Tata Technologies, through which it provides engineering and design solutions. Tata Motors has set up manufacturing units in India and abroad, including countries like Argentina, Thailand, South Korea, et cetera, to help it facilitate its operations in international markets.
History of the Company
Tata Motors was set up in 1945 as a part of Tata Group. Back then, the company’s primary product line was comprising locomotives. Tata Motors entered the Indian market through a joint collaboration with Daimler Benz AG, and in the mid-1950s, the company launched its first commercialised vehicle. This collaboration lasted up until 1969 after which, Tata Motors entered the commercial vehicle market in 1991 with the launch of Tata Sierra and Tata Estate. This made Tata Motors the first automotive company in India to develop a competitive automobile on its own.
Over the course of the next decade or so, Tata Motors launched other flagship products like Tata Sumo, Tata Indica, and Tata Nano. These products truly elevated the status of Tata Motors by playing a key part in its success. As the company thrived, it expanded in international markets with the help of acquisitions. Tata Motors bought South Korea’s Daewoo Commercial Vehicle Company in 2004, followed by the acquisition of Jaguar Land Rover from Ford Motor in 2008. In 2015, the company took another step towards becoming a global name when it named Lionel Messi as its brand ambassador.
Natarajan Chandrasekaran - Chairman, Tata Sons
N Chandrasekaran is the Chairman of the Board of Tata Sons, the holding company of Tata Group comprising Tata Consultancy Services (TCS), Tata Motors, Tata Steel, Titan, et cetera. Chandra rose through the ranks in his 30-year career at TCS which he joined right after finishing his university. In fact, he served the as the Chief Executive Officer of TCS from 2009-2017, after which he was appointed as the Chairman of the Board. It was under his leadership that TCS became one of the leading IT companies in the world and the largest private sector employer in India.
He has received several awards, including the Best CEO Award for 2013 and 2014 by Business Today, and CNN-IBN Indian of the Year 2014 award. Chandra holds a Masters degree from Regional Engineering College in Tiruchirappalli.
Guenter Butschek - Chief Executive Officer and Managing Director
Mr. Butschek is the present CEO and Managing Director of Tata Motors. His responsibility includes managing the Indian operations of Tata Motors, along with its regional and international subsidiaries, except for Jaguar Land Rover.
Prior to joining Tata Motors, Mr. Butschek was with Airbus Group, where he served in the capacity of Chief Operating Officer of Airbus for more than four years. He started his career with Daimler AG, where he worked for 25 years and held management positions in production, industrialisation, and procurement divisions.
Satish Borwankar - Chief Operating Officer and Executive Director
Mr. Borwankar has been with Tata Motors since 1974. Back then, he joined the company as a graduate engineer trainee and over the years, he has been tasked with several responsibilities, ranging in the field of product development, manufacturing operations and quality control. He was also instrumental in establishing Greenfield projects for the company.
Tata Motors Listing and Indices
In India, Tata Motors Limited is listed on NSE (National Stock Exchange) and BSE (Bombay Stock Exchange) and its shares can be bought and sold accordingly. Being a leading automobile company in the country, Tata Motors is a part of several benchmark indices like SENSEX and NIFTY. Tata Motors, along with Tata Steel and TCS, comprise the three Tata companies which are listed on the two major indices. Tata share price is considered for calculation of other indices as well such as BSE AllCap, BSE Auto, CNX 100, CNX 200, BSE 200 and many more.
Tata Motors stocks are also traded on the NYSE (New York Stock Exchange) and Luxembourg Stock Exchange.
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