Tata Motors' Q4 Results: An Overview

The financial health of Tata Motors has recently been disclosed, and the astonishing Q4 results have certainly turned heads in the industry. This blog will discuss and dissect these financial figures.

Unlegendary Ride of Tata Motors

There's no denying that Tata Motors has been riding a roller coaster of sorts with their stock dipping by 8%. Quite shockingly, this dip occurred despite announcing their impressive Q4 financial figures. Two elements need to be evaluated when interpreting these financial results:

1. The actual results for Q4, half-yearly, or the entire financial year.
2. The crucial management guidance.

Let's now delve into these figures to uncover the mysteries lying beneath the surface.

Consolidated View

Tata Motors' consolidated revenues reached an all-time high of 4,37,000 crores in FY24. Operating profits (EBITDA) were also at a record high, around 62,400 crores. Pre-tax profits (before exceptional items) landed a monumental figure of 28,900 crores, while their net profit scored the top slot with 31,800 crores. Dividends were declared at 3 rupees per share, with an extra special dividend also at 3 rupees.

The Cash Flow Situation

The free cash flows for the year reached their highest-ever figures. The jump from a mere 7,800 crores the previous year to a monumental 26,900 crores the following year is noteworthy. As expected, this has triggered a reduction in the company's net debt, aiding the company's optimistic target of becoming net debt-free by FY2025.

Dissecting Revenues

It's noteworthy to mention that Tata Motors grapples with three key segments when we talk about its revenue distribution—the Jaguar Land Rover (JLR), Tata Commercial Vehicles (CV), and Passenger Vehicles (PV)—which includes the promising EV segment. Out of these, nearly 70% of the company's revenue originates from JLR.

Unraveling Statistics: Segment-wise

JLR registered record revenues and profits before tax (PBT) for Q4 and FY24. The EBIT margin for Q4 was 99.2%, and the whole year margin hovered at 8.5%. Free cash flow also saw a record high at 2.3 billion pounds for FY24.

The Achilles' heel in the JLR segment was the order book, which weighed in only 133,000 vehicles, down from 168,000 the previous year.

On the bright side, the projections for JLR are impressive, with targeted EBIT margins for FY25 around the same level as FY24 and aimed at net debt zero.

Moving on to Commercial Vehicles, the revenue and EBIT were both up, with an impressive EBIT figure of 8.2%, up by 300 basis points.

For Passenger Vehicles, the revenue trend was similar, with a 19.3% increase. The EBIT rose to 2.9% from the previous year's 1.4%.

Understanding the Dips and Surges

The slump in Tata Motors' stock despite the firm's record-breaking financial performance can be attributed to its weaker outlook for H1 FY25, as indicated by the management. However, they've indicated strong performance for the entirety of FY25, suggesting the slump may be temporary and recover in the latter half of the fiscal year.

There are a few concerns present, including geopolitical developments, interest rates, fuel prices, and inflation. Despite these challenges, a strong demand for passenger cars is expected to continue coupled with some potential moderation due to elections and seasonal factors.

In conclusion, Tata Motors' Q4 results present a strong financial portrait for the company, while highlighting potential hurdles in the coming months. Long-term investors might consider these short-term challenges a 'discount' as they plan for the long haul.