Tata Motors share price in focus ahead of Q4 results today: Here’s what analysts expect

The Tata Motors passenger vehicle sales in India and Jaguar Land Rover sales remains strong. The Medium and Heavy commercial vehicles sales though ride on a strong outlook led by robust economic growth expectations in the country , however have seen tepid Q4 sales thanks to the high base of last year during the March quarter and also ongoing general elections in the country.

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Volumes to remain a mixed bag with strong PV , tepid CV sales

The Domestic Passenger vehicle sales on a strong footing are expected to have grown 14.7% year-on-year and 12.4% sequentially to 1,55,651 units during the quarter ending March’2024.

The medium and heavy commercial vehicle sales at 52,186 units are likely to have grown 12.1% sequentially though own 6.9% year-on-year during the March quarter as per HDFC Securities data.

The Light Commercial Vehicle sales that have 14.8% sequentially however also are down 4.4% year-on-year to 57,253 units during the Q4

Analysts at Motilal Oswal financial Services expect CV growth to moderate up to 1HFY25 largely due to a slowdown in industrial activity ahead of elections, and expect demand to revive in 2HFY25. The Commercial vehicles are pegged to grow 7% CAGR (compound annual growth rate) over FY24-26. 

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Firm Domestic performance

During the quarter ending March’2024  analysts at Kotak Institutional Equities expect standalone business revenues to increase by 8% year on year , led by 15% yoy increase in average selling price due to a richer product mix and price hikes taken over the past one year, partly offset by 6% year on year decline in volumes due to weak demand trends in Medium and Heavy Commercial Vehicle or MHCV trucks on account of elections and  higher base. 

On the operating front, they  expect overall Ebitda margin to improve by 170 bps sequentially to 13.1% driven by operating leverage benefit and commodity tailwinds in 4QFY24.

The  domestic Passenger business that remain on strong footing is likely to see good improvement in Earnings before interest, tax, depreciation and amortisation (Ebitda). The Ebitda is pegged to improve to 7.4% for PV ( up 90 basis points sequentially) in 4QFY24 driven by a richer product mix (higher mix of SUV segment) and commodity tailwinds, partly offset by price cuts taken in Energy Vehicles . 

Jaguar Land Rover expected to report healthy growth trend

Meanwhile at the consolidated level While Jaguar Land Rover Volumes are expected to remain strong. Kotak analysts expect JLR volumes (excluding China JV) to increase by 8% sequentially led by a strong order book. 

Those at Motilal Oswal Financial Services however expect JLR volumes to see 17% YoY growth. 

JLR operating performance nevertheless can be influenced by product mix and marketing spends

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Overall, revenues (ex China JV) are anticipated to increase by 7% sequentially in 4QFY24. Kotak analysts expect reported Ebitda margin to increase by 40 bps sequentially to 16.6% driven by  a richer product mix and operating leverage benefit, partly offset by higher VME. As a result, they expect JLR EBIT margin is pegged to come in at 9.4% in 4QFY24 as per Kotak. MOFSL also expects estimate an EBIT margin of 9.6% ( up 80bp sequentially ) for JLR, led largely by operating leverage

Key monitorable 

As the product mix and marketing expenses will be watched from JLR performance, the  other monitorables include management guidance for FY24 in terms of pick up in Commercial Vehicle sales and also Electric Vehicles progress.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions

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Published: 10 May 2024, 12:49 PM IST