Tata Motors Q4 Preview: Robust sales, low commodity prices to aid earnings

Original equipment manufacturer Tata Motors is set to announce its fourth quarter results for financial year 2024 (FY24) on Friday, May 10.

Analysts anticipate robust results for Tata Motors, propelled by the advantages of operating leverage, favourable commodity trends and strong volume growth across its various segments. 

Tata Motors Limited sales in the domestic & international market rose over 5 per cent to 2,65,090 vehicles in Q4FY24, as compared to 2,51,822 units during Q4 FY23, Tata Motors said in a statement.

In April, Tata Motors’ total domestic sales zoomed 12 per cent to 76,399 units, from 68,514 units in the same month last year (April, 2023).

Meanwhile, on the bourses, Tata Motors stock gained merely 0.43 per cent in the past five trading sessions. By comparison, S&P BSE Sensex lost 1.36 per cent during the same period.

Here’s what brokerage expect from Tata Motors in Q4:

Kotak Institutional Equities 

Kotak Institutional Equities anticipates a surge in the standalone business revenues for the fourth quarter of FY24, projecting an 8 per cent year-on-year (Y-oY) increase. The growth is attributed primarily to a 15 per cent year-on-year surge in average selling rices (ASPs), driven by a more diversified product mix and the implementation of price adjustments over the past year. 

Ebitda margin may improve due to the benefits of operating leverage and favourable commodity market conditions in the fourth quarter of FY24. 

The overall improvement is attributed to a more robust product mix, with a greater emphasis on the SUV segment, as well as favourable commodity market conditions, although partly offset by price adjustments in the electric vehicle (EV) segment.

Moreover, Kotak Institutional Equities forecasts an 8 per cent quarter-on-quarter (Q-o-Q) increase in Jaguar Land Rover (JLR) volumes, excluding China JV, due to a robust order book. Consequently, revenues, excluding China JV, are expected to rise by 7 per cent quarter-on-quarter in the fourth quarter of FY24. 

The profit is anticipated to come in at Rs 8,289.8 crore, up 53.3 per cent year-on-year, while revenue is expected at Rs 1,21,113.2 crore, reflecting a 14.3 per cent year-on-year growth, the brokerage said. 

The Ebitda is projected to jump 44.8 per cent to Rs 18,546.5 crore. Meanwhile, the Ebitda margin expected to come in at 15.3 per cent, up by 322 basis points year-on-year.

ICICI Securities 

Those at ICICI Securities predict robust Ebitda growth within the automotive sector, with 4-wheelers (4Ws) anticipated to grow by approximately 30 per cent. 

The growth is attributed to the strong volume and mix growth of utility vehicles (UVs) within passenger vehicles (PVs) across major players such as Maruti Suzuki, Tata Motors, and Mahindra & Mahindra, compared to commercial vehicles (CVs) and 2Ws.

Key factors to monitor, analysts said, include the demand outlook for rural markets, developments in electric vehicles (EVs), the continuity of exports revival, raw material prices and pricing discipline among players, acceptance of premiumisation trends, progress in mergers and acquisitions (M&A) and divestment activities, and investments in EVs by companies in terms of product development and distribution. 

Additionally, the future demand for commercial vehicles beyond the first half of FY25 and its driving factors will be crucial.

Taking these factors into account, Tata Motors, analysts said, may post an adjusted profit of Rs 7,131.3 crore, marking a whopping 99 per cent year-on-year increase; revenue to climb 14 per cent to Rs 1,20,634.6 crore; and Ebitda to jump 35 per cent to Rs 17,701.8 crore during the same period.

Prabhudas Lilladher 

Meanwhile, analysts at Prabhudas Lilladher project robust growth for Tata Motors on the back of strong volume expansion across various segments. Moreover, an elevated mix of UV sales and consistent performance from JLR are expected to fuel 183 basis points year-on-year expansion in Ebitda margin to 13.9 per cent. 

Considering these factors, Prabhudas Liladher expects Tata Motors’ adjusted profit to come in at Rs 6,169.8 crore, up 9.7 per cent year-on-year increase; Revenue at Rs 1,24,252.1 crore, up 17.3 per cent Y-o-Y; Ebitda at Rs 17,285.9 crore, indicating a 35.1 per cent year-on-year rise.