Tata Motors share analysis

Today we will talk about Tata Motors whose stock price was once at 60-65 and now is trading more than 300 Some days back its quarterly results were announced and we were able to see a lot of things.

So we are making this article for you to understand how to read results and make investment decision basis that We will talk about their business, then the results and at last compare it with its peers So let us start today's article by starting with Tata Motors as a company

Tata motors q4 results 2021

They are the leading global automobile manufacturing meaning they produce automobiles in different parts of the world. They manufacture passenger cars, buses, commercial vehicles, and in the defensive sector.

This means they have a very diverse business and is spread across the world. They have businesses in India, South Korea, China, UK and have joint ventures in many others like they have Tata Daewoo in South Korea and all the cars of Jaguar and Land rover are all made under Tata motors.

They bought Jaguar and Land Rover in 2008 from Ford and merged all the companies in 2013 74% of the total sales comes from Land Rover out of JLR and the rest 26% from Jaguar JLR is always in focus because it contributes a lot in the revenue of Tata Motors 80% of the total revenue comes from JLR.

In 2004, they bought Daewoo of South Korea to establish themselves as global leaders in the commercial vehicle sector. In India, they have 43% in the commercial vehicle segment making them a leading player. They are not solely dependent on one country for revenue but are diverse in geography.

Let us see the country-wise revenue breakup

In FY20 North America was the major contributor at 20%, followed by India at 17.8% UK at 16.3%, China at 11.4% and the rest of Europe at 16.6% and 17.8% from the rest of the world.

Tata Motors had announced that they will keep a focus on the electric vehicle segment due to which their JLR segment has also started into the EV sector.

They even launched some in India and is said to explore the EV segment more in the coming times. They announced in March 2021, that they have got the approval to bifurcate their business into 2 so that they can explore the opportunities in the EV segment if it's made a standalone entity.

So this has to be observed in the coming times that how is it is bifurcated and how it performs Now let us talk about its quarterly results and clear doubts like if they had a loss but saw a jump in revenue So let us start by comparing the company's revenue which is determined by its sales performance.

We will compare its revenue and profits with Q4FY2020

The revenue in Q4FY21 was Rs 89,319 Crores as compared to Rs 63,057 Crore last year So we can see a 41.65% jump in the revenue, which is a very significant jump.

But the company booked a loss of 9,894 Crore last year as compared to 7,605 Crore this year But if you see the business in the last quarter last year, it had a huge impact due to lockdowns all over the world.

So let us now compare it with Q3FY21, its revenue was 76,365 Crore as compared to 89,319 Crore in the recent quarter meaning its revenue rose by 16.96%, they booked a profit of 2900 Cr in the last quarter a compared to a loss of 7605 Cr in this quarter.

Let us now compare the annual results, FY19-20 and FY20-21

The revenue in FY19-20 was 2.64 lakh Cr with a loss of 12000 Cr as compared to FY20-21, revenue at 2.52 lakh Cr with a loss of 13,451 Cr meaning their total income decreased by 4.39%.

Let us now talk about the result in detail to get an insight

The company has done restructuring meaning they have done some write-offs and added some costs, and if we remove them, the company would have made 5703 Cr profit but what does the company written off, let us discuss in detail.

They have taken up an exceptional charge of 14994 Cr for the Land Rover Reimagine strategy They have done write-downs worth 9600 Cr for the models that have been canceled by the company.

The company has also taken 5300 Cr for restructuring which are one time costs and do not have to be repeated And companies normally do these write-offs to clean their books So the major reason for the revenue being there but not the profit were these exceptional costs The companies margins have reduced from 15.2% to 14.4%, the major reason being the depreciation increased of their assets.

The company sold 21% more vehicles in this quarter. The JLR sales dropped by 3.88% QoQ as compared to a jump of 12% last year same quarter. Their China JLR sales saw a jump of 127%.

Now we will see the passenger segment in India where they have grown

They had a market share of 4.8% in FY20 as compared to 8.2% in FY21. The company is aggressively launching new vehicles and facelifting them to increase their market share. They have vehicles in every segment to give direct competition to others. In terms of EV in India, they are the market leaders with a 71.4% share wherein they are looking to grow more. If we the overall growth in FY21, the passenger segment saw a growth of 69% and the EV segment by 218%.

Let us now see its numbers and compare it with its peers.

We cannot directly compare it with the companies like Maruti, M&M, Eicher motors because the rest have a major part of their businesses in India. Their market cap is around 1.18 lakh Cr and the market leader in terms of market cap is Maruti Suzuki at 2.05 lakh Cr

PE ratio of Maruti is at 46, M&M at 246, Eicher at 62, and Tata Motors is a loss-making company right now and hence cannot be discussed. The ROE of Tata Motors is -19.73%, Eicher at 19.36%, Maruti at 8.61%. If we see the past year returns, Tata Motors gave 312% and 5-year return of -2.99% here Maruti gave the best 5-year returns in the whole segment at 11.65%.

We make all article for educational purposes so that we can deliver the right information. You can further do your own research, invest for the long term and make good returns.