Tata Motors Q4FY24 Results – A Monumental Surge in Profit Driven by JLR and Strategic Excellence

Tata Motors has unveiled its results for the January-March quarter of fiscal 2023-24 (Q4FY24), reporting an extraordinary 222% surge in net profit. This impressive growth, driven by a tax credit and exceptional sales of SUVs from Jaguar Land Rover (JLR), has surpassed market expectations and highlights the company's strategic initiatives, record-breaking revenues, and a promising future outlook with a continued focus on electric vehicles and operational efficiency.

Record-Setting Revenues and Profits

PB Balaji, Group Chief Financial Officer (CFO) of Tata Motors, highlighted the unprecedented success, stating, "Tata Motors Group delivered its highest-ever revenues, profits, and free cash flows. The India business is now debt-free, and we are on track to become net automotive debt-free on a consolidated basis in FY25. The businesses are executing well on their distinct strategies, and we are confident of sustaining this strong performance in the coming years."

The company reported a net profit of ?17,407.2 crore for Q4FY24, compared to ?5,400 crore in the same period last year. This monumental increase can be attributed to a combination of factors, including a substantial tax credit and stellar performance across its automotive divisions, particularly the booming sales of SUVs from its British luxury arm, JLR.

Live Updates and Dividend Declaration

Tata Motors remains cautiously optimistic about domestic demand for the rest of the year, expecting a relatively weaker H1. "The premium luxury segment demand is likely to remain resilient despite emerging concerns on overall demand. Despite this, we are confident of delivering a strong performance in FY25," stated Tata Motors in its regulatory filing on May 10.

The board of Tata Motors has recommended a final dividend of ?6 per ordinary share and ?6.20 per 'A' ordinary share for the financial year ending March 31, 2024. If approved at the annual general meeting, the dividend will be paid to eligible shareholders by June 28, 2024.

Key Highlights of Tata Motors Q4FY24 Performance

P&L Account Revenue and Operating Performance

In Q4FY24, Tata Motors' total revenue from operations climbed 14.3% to ?1.2 lakh crore, compared to ?1.05 lakh crore in the same period last year. JLR, renowned for its Range Rover and Defender SUVs, contributed significantly, forming about two-thirds of the consolidated revenue.

On the operational front, the company’s earnings before interest, taxes, depreciation, and amortization (EBITDA) for the March quarter rose 33% to ?17,035 crore, up from ?12,810 crore in the previous year. The EBITDA margin increased by 210 basis points (bps) to 14.2%, from 12.1% in the year-ago period.

Dividend Details

The board of directors at Tata Motors has recommended the declaration of a final dividend of ?6 per ordinary share of ?2 each (at 300%) and ?6.20 per 'A' ordinary share of ?2 each (at 310%). This includes a special dividend component, reflecting the company's robust financial health and commitment to rewarding shareholders.

JLR Q4 Performance

JLR delivered another record-breaking quarter in Q4FY24, with net profit soaring to ￡1.4 billion from ￡259 million a year ago. JLR’s revenues for FY24 reached a record ￡29 billion, a 27% increase compared to FY23, while net profit for FY24 stood at ￡2.6 billion.

JLR’s wholesale volumes, excluding the China joint venture Chery Jaguar Land Rover, rose 16% to 110,190 units, driven by improved production and robust global demand. Retail sales climbed 11%.

"We have delivered a record financial performance for the company, generating free cash flow of ￡2.3 billion, enabling us to reduce net debt to ￡0.7 billion. The foundation of this performance was the sustained global demand for JLR's modern luxury vehicles, led by Range Rover and Defender brands, underpinned by a consistent focus on operational improvement," said Adrian Mardell, CEO of JLR.

Tata Motors Commercial Vehicles (CV)

In Q4FY24, Tata Motors’ commercial vehicles revenue stood at ?21,600 crore, with FY24 revenue at ?78,800 crore. Domestic wholesale CV volumes in Q4FY24 were 1,04,600 units, a 7% decline year-on-year due to increased pre-buy in Q4FY23 driven by the BS6 Phase II transition.

Girish Wagh, Executive Director of Tata Motors Ltd, noted the Indian CV industry grew by a modest 2% in volumes during FY24, impacted by a high base effect of FY23, elections in five states, and the announcement of general elections.

"Our sharp focus on profitable growth resulted in the CV business recording its highest-ever revenues of ?78,800 crore and profits of ?6,100 crore in FY24. Going forward, we will intensify our efforts to grow market share, profitably and consistently, in every business segment by delivering more value to customers with innovative products, smarter services, and holistic mobility solutions," he added.

Tata Passenger Vehicles (PV)

In Q4FY24, Tata passenger vehicles recorded revenue of ?14,400 crore, with FY24 revenue at ?52,400 crore. PV volumes in Q4FY24 were 1,55,600 units, a 14.8% increase from the previous year, bolstered by new SUV facelifts and multiple powertrains.

"Passenger vehicle sales in India set a record in FY24 with over 4.2 million units sold, driven by SUVs (50% of overall sales) and emission-friendly powertrains. Tata Motors recorded its third consecutive year of highest sales volumes with 6% growth in wholesales and 10% in retail sales over FY23," said Shailesh Chandra, Managing Director, Tata Motors Passenger Vehicles and Tata Passenger Electric Mobility.

The company sold 73,800 EVs during the year, marking a 48% increase compared to FY23, and crossed the milestone of 1.5 lakh cumulative EV production. Tata Motors, India's third-largest carmaker by sales, is renowned for its 'Nexon' and 'Punch' SUVs, and it dominates the EV market in the country. Ahead of the Q4FY24 results announcement, shares of Tata Motors settled 1.62% higher at ?1,046.85 apiece on the BSE.

Strategic Moves and Future Outlook

Tata Motors Ltd announced on Thursday, August 1, that its board approved the demerger scheme of its commercial vehicle (CV) arm, which will result in two separate listed entities. The demerger scheme is expected to be completed within 12-15 months.

As part of the scheme, the board approved a composite scheme of arrangement amongst TML, TML Commercial Vehicles Ltd (TMLCV), Tata Motors Passenger Vehicles Ltd (TMPV), and their respective shareholders under sections 230-232 and other applicable provisions of the Companies Act, 2013.

Despite reporting robust numbers for the June quarter, Tata Motors shares experienced a nearly 5% drop in early trade, reaching ?1,090 apiece, due to profit booking after a sharp run-up in share prices.

The management remains cautiously optimistic for FY25, anticipating constrained production for JLR in Q2 and Q3 due to the annual summer plant shutdown and supply chain issues caused by floods at a key aluminum supplier.

"We are likely to witness constrained production in Q2 and Q3, reflecting the annual summer plant shutdown and floods at a key aluminum supplier. As we work towards mitigation and recovery, we will keep our guidance on our key full-year financial deliverables of >8.5% EBIT and achieving net cash," the company stated in its exchange filing.

Domestically, Tata Motors anticipates a gradual improvement in demand for the rest of the year, driven by ongoing infrastructure investments, favorable monsoon conditions, positive macroeconomic factors, and festive demand. However, the company notes that global demand is likely to remain muted.

The Road Ahead

In summary, Tata Motors has showcased an impressive financial performance in Q4FY24, driven by robust demand for its SUVs, strong performance from JLR, and strategic initiatives to strengthen its market position. The company’s future outlook remains positive, with plans to launch new electric vehicles and a focus on operational efficiency and growth across all segments.

Investors and automotive enthusiasts can look forward to continued innovation and strategic growth from Tata Motors, as the company navigates the evolving automotive landscape with agility and foresight.

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