In the realm of stock market highs and lows, TATA Motors has taken centre stage with an astonishing bull run, soaring from Rs 400 to a staggering Rs 950 in just a year. This whirlwind of a journey has ignited conversations and speculation across financial circles. In this exploration, we dissect the TATA Motors fundamental analysis, weaving through the positives and negatives that have propelled the company’s share price to unprecedented heights. But before we zoom into the nitty-gritty, let’s grasp the bigger picture – the automotive industry in India, a cornerstone of the nation’s economy. Join us on this ride as we unravel the story behind TATA Motors’ remarkable ascent and navigate the intricate landscape of India’s thriving automotive sector. Fasten your seatbelts for an insider’s look at TATA Motors, where every surge and dip tells a tale of market dynamics and industry influence.
Based on the report presented by the Press Information Bureau Ministry of Information and Broadcasting, Government of India. The contribution of this sector to the National GDP has risen to about 7.1% now from 2.77% in 1992-93. It provides direct and indirect employment to over 19 million people. In the automobile market in India, Two-wheelers and passenger cars accounted for 77% and 18% market share respectively during the year 2021-22.
Passenger car sales are dominated by small and midsized cars. Export of the total number of automobiles increased from 4,134,047 in 2020-21 to 5,617,246 in 2021-22, registering a positive growth of 35.9%
India aims to double its auto industry size to Rs. 15 lakh crores by end of year 2024. There
https://static.pib.gov.in/
has been an FDI inflow of $33.77 billion in the industry from April 2000 till September 2022
which is around 5.48% of the total FDI inflows in India during the same period.
TATA Motors fundamental analysis- About the company
The company is a renowned automobile manufacturer offering a diverse portfolio comprising cars, utility vehicles, trucks, buses, and defence vehicles. It operates through two segments: Automotive and Others. The Automotive segment encompasses various activities like vehicle development, design, manufacturing, assembly, and sales, including vehicle financing. Additionally, this segment includes sub-segments such as Tata Commercial Vehicles, Tata Passenger Vehicles, Jaguar Land Rover, and Vehicle Financing. Also, it extends to the sale of related parts and accessories.
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It is the third-largest sales and service network in India after Maruti Suzuki and Hyundai.
The EV Revolution
We have seen in recent times that, the Central as well as the state governments are actively working towards the adoption of sustainable methods to curb the adverse effects of climate change. Various policies have been implemented and many are in process. Our Honourable Prime Minister Narendra Modi announced in the Glasgow Meeting Of Climate Change (COP26) that ” India will draw half of its energy requirement from renewable sources by 2030 and achieve carbon neutrality by 2070. Also, the electric vehicle project has been the government’s focus for at least five years.
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In the coming time, the automotive segment is going to witness some major changes out of which is Electric Vehicles. As we know India is a part of those countries that support the Global EV30@30campaign that aims to increase the sales of Electric vehicles by at least 30% by 2030. Also, the government of India has taken several measures to create an EV atmosphere in the country to support the campaign. The initiatives are Initiatives for the Stakeholders for Electric Vehicles, FAME-II Initiatives for Electric Vehicles, PLI Scheme and Related Initiatives for Electric Vehicles, Battery Swapping Policy, Tax Reduction on Electric Vehicles, Special E-mobility Zone.
All these factors have given a boost to the EV manufacturing by TATA Motors which is the largest player in the Electric Vehicle market of India. The EV contribution in the company’s portfolio is likely to increase to 25% in 5 years, and reach 50% by 2030,” the company said in its annual report for 2022-23 (April-March). Tata Motors’ EV sales crossed the 50,000 annual sales milestone and constituted 12% of the sales portfolio in the March quarter –Based on The report of Economic Times.
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Day-to-day news
TATA Motors Essentials- Fundamental And Financial Analysis
The company has achieved an impressive operating revenue of Rs. 345,966.97 Cr. over the past 12 months, and its annual revenue growth rate of 25% is outstanding.
Despite having a fair ROE of 6% and ROCE of 6.12%, TATA Motors shows potential for improvement in these areas. The company’s high debt-to-equity ratio of 196% is a matter of concern and requires attention. Additionally, the dividend yield provided by the company stands at 0.36%.
As of March 2023, the promoters’ stake in TATA MOTORS remained steady at 46.39% for the quarter. In contrast, mutual funds raised their stake by 2.04%, resulting in a total stake of 8.98%. Overall, institutional holding in the company increased by 3.92% during the same period, reaching 33.17% by March 2023.
Summing up, TATA Motors exhibits notable strengths, suggesting that a more detailed examination of the stock would be worthwhile.
Past Year Performances- TATA Motors fundamental analysis
In the last five years, TATA Motors Ltd has experienced a negative 20% CAGR in terms of profit. However, in the trailing twelve months (TTM), the company has achieved an impressive profit growth of 123%.
Over the past three years, TATA Motors’ share price has risen by 75%, and in the last year alone, it has increased from Rs 393.0 to Rs 559.3, resulting in a gain of Rs 166.25 or approximately 42.30%.
The company has shown a low ROE of -7.15% over the last three years, but the one-year ROE stands at 6%.
In terms of sales growth, TATA Motors has delivered a poor performance with a 3.48% increase over the past five years. However, this figure has improved to 10% in the last three years and further to 24% in the most recent year.
The company’s current PE ratio stands at 68.14, indicating a high valuation in the market. Similarly, the EV/EBITDA ratio is 37.97, reflecting a relatively high valuation based on the enterprise value to earnings before interest, taxes, depreciation, and amortization.
Earnings And Revenues For TATA Motors- TATA Motors fundamental analysis
In the previous year, the company witnessed significant growth in annual revenue, with a remarkable increase of 24.5% to reach Rs 350,600.2 Crores. Additionally, the annual net profit experienced a substantial surge of 121.1%, amounting to Rs 2,414.3 Crores.
Although the stock price demonstrated a commendable rise of 37.4%, it slightly underperformed its sector by 1.1% during the same period.
TATA MOTORS surpassed expectations in the last quarter, reporting earnings of 14.20 INR compared to the estimated figure of 7.73 INR. This represents a significant surprise of 83.78%. Additionally, the company’s revenue for the same period reached 1.06T INR, exceeding the estimated figure of 1.04T INR.
Looking ahead, the estimated earnings for the next quarter are projected to be 11.26 INR, while the revenue is expected to reach 1.03T INR. These optimistic estimates indicate potential growth for the company in the upcoming period.
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BOTTOM LINE
In conclusion, TATA Motors demonstrates both strengths and areas for improvement in its company analysis. There are some concerns to address. Furthermore, the company’s stock has shown both positive and underperforming aspects. Overall, a comprehensive analysis of TATA Motors is recommended to assess its financial health, debt management, and prospects. Keeping in mind the EV revolution, TATA Motors’ share has huge potential for growth in the coming future.
That’s all for today’s post. Hope you get some valuable insight from here.
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Disclaimer
The blog is meant for informational purposes and serves the general analysis of the stocks. The contents provided here are based on careful research and analysis utilizing the fundamental and technical indicators over some time. The post does not consist of any direct recommendation about Investing or trading in the securities market. Thorough research and careful consideration are necessary for individuals to fulfil their responsibility in making financial decisions. Seeking professional advice before making any financial decisions is always advisable.
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