Tata Motors - DVR

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Tata Motors working on dozen alternate fuel options for CV’s-Trucks & Buses - What are these?

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With DVR stock going for merger with Tata Motors, and then for bonus of another entity; should we start with SIP buying in this stock???

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I am sitting at 240% increase in Tata Motors DVR. Should I start doing SIP in the stock now or should I wait for the merger to happen first?

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Tata Motors aims 20% market share in PV market by 2030 as against current PV market share of 14 %

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Tata Motors

EU MOVES AHEAD WITH PLANNED TARIFFS ON EV IMPORTS FROM CHINA - BBG

EU PROVISIONAL DUTIES ON CHINESE EV IMPORTS TAKE EFFECT JULY 5

EU TO ADD 37.6% AVG DUTY ON NON-COOPERATING CHINESE BEV MAKERS

EU TO ADD 20.8% AVG DUTY ON COOPERATING CHINESE BEV PRODUCERS

Tata motors trades at 10 P/E, which is substantially lower than the industry average of around 28. Any idea why is the case?

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If you normalise the earnings for other income and tax, I think the PE will be close to the industry average. I find the stock fairly valued because it is PV + EV + JLR + CV + Lending. CV is coming off a high base. BMW and Daimler trade at 5-6PE with 6-7% dividend yield which is where JLR will eventually be valued too.

There’s a lot of segments in the business, you can’t value this stock based on industry multiples because majority of their EBITDA is from JLR, there’s no listed luxury car manufacturer in India so the comparison is not apples to apples.

Disc : Tata Motors DVR was 40% of the market value of my family fund. Entered at 200, exited at 680 few months back completely when demerger announcements came in.

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https://aicl-mum-bucket.s3.ap-south-1.amazonaws.com/Production/www-tatamotors-com-NEW/wp-content/uploads/2024/07/historical-jlr-quarterly-wholesale-and-retails-carline-and-regionwise-June-24-1.xlsx

All volume sales data for JLR last 10+ yrs

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Tata Motors results

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Tata Motors Q1 FY2025 Analysis: Key takeaways!!

Tata Motors demonstrated resilience in Q1 FY2025, with revenue growing 5.7% year-over-year despite modest volume growth of 2.5%. The company’s PBT before exceptional items showed robust growth to Rs. 8,800 Cr, driven by favorable commodity prices across both Jaguar Land Rover (JLR) and Tata Motors India operations. EBITDA remained steady at 14.4%, while EBIT margins improved by 30 basis points due to operating leverage.

Strategic Initiatives:

  1. Demerger: Tata Motors announced plans to demerge its commercial vehicle (CV) and passenger vehicle (PV) businesses into separate listed entities, with an expected completion timeline of 12-15 months.

  2. Tata Motors Finance Merger: The company is merging its NBFC arm, Tata Motors Finance, with Tata Capital, aiming to complete the transaction in 9-12 months.

  3. Product Launch: Tata Motors is set to launch the Tata Curvv, entering the mid-size SUV segment on August 7, 2024.

  4. JLR’s Freelander Brand Revival: JLR is licensing the Freelander brand to its China joint venture, combining it with Chery’s EV engineering to create new products for the Chinese market with potential for global expansion.

Trends and Themes:

  1. Electric Vehicle Adoption: Despite a slowdown in fleet segment EV sales, Tata Motors continues to focus on EV penetration and expanding its product portfolio across various price points.

  2. Premiumization in JLR: Range Rover and Defender models are driving growth, with their combined share reaching 68% of JLR sales in Q1.

  3. Digital Transformation: Tata Motors is seeing increased contribution from digital lead generation in retail sales, reaching 28% in Q1.

Industry Tailwinds:

  1. Infrastructure Investment: Continued government focus on infrastructure projects is expected to drive demand for commercial vehicles.

  2. Healthy Monsoons: Favorable monsoon conditions are likely to boost rural demand and overall economic activity.

  3. Festive Season: The upcoming festive season is anticipated to drive demand across vehicle segments.

Industry Headwinds:

  1. Global Economic Uncertainties: Muted global demand and regional variations in market performance pose challenges, particularly in China and Europe.

  2. Supply Chain Disruptions: JLR faces potential production constraints due to aluminum supply issues caused by flooding at a key supplier’s plant.

  3. Financing Challenges: The small commercial vehicle and pickup segments continue to face headwinds due to financing issues for first-time users.

Analyst Concerns and Management Response:

  1. JLR Production Constraints: Analysts expressed concern about the impact of aluminum supply disruptions on JLR’s production. Management assured that they are working aggressively to find solutions and minimize the impact, leveraging the Tata ecosystem and other suppliers.

  2. EV Fleet Segment Slowdown: The management acknowledged the softness in EV fleet sales but emphasized that it represents only 10% of total EV sales and expects a potential recovery with the announcement of FAME III policy.

  3. Margin Sustainability: Analysts questioned the sustainability of strong margins in the CV segment. Management confirmed that there were no one-offs in Q1 results and expressed confidence in maintaining margin improvement through robust cost reduction and value-selling initiatives.

Competitive Landscape:
The management noted increased competitive pressures in certain markets:

  1. Europe: JLR observed higher competitor discounts in the European market.
  2. China: The company is closely monitoring the competitive situation in China, particularly in the lower price segments.

Guidance and Outlook:

  1. JLR: Maintained full-year guidance of >8.5% EBIT margin and achieving a net cash position.
  2. CV Segment: Expects flat growth in small commercial vehicles and pick-ups, with higher growth in the CV passenger segment.
  3. PV Segment: Anticipates gradual improvement in domestic demand throughout the year.

Capital Allocation Strategy:

  1. JLR: Expects capex to be close to £3.5 billion for FY2025, with a focus on developing BEV, PHEV, and ICE powertrains.
  2. Tata Motors India: Maintaining the committed investment rate of around Rs. 8,000 Cr for the year.

Opportunities & Risks:

Opportunities:

  1. EV Market Expansion: Potential growth in personal and fleet EV segments with new product launches and policy support.
  2. JLR’s Freelander Brand: New revenue stream through licensing and profit-sharing in the Chinese market.
  3. Premium Segment Growth: Continued strong demand for Range Rover and Defender models.

Risks:

  1. Supply Chain Disruptions: Potential production constraints due to aluminum supply issues.
  2. Global Economic Slowdown: Muted demand in certain regions, particularly China and Europe.
  3. Regulatory Changes: Uncertainty around EV incentives and emissions norms.

Regulatory Environment:

  1. FAME III Policy: The company is awaiting details on the continuation of EV incentives for fleet segments.
  2. EU CO2 Emissions Norms: JLR is preparing for 2025 emissions norms in the EU market.
  3. PLI Scheme: Tata Motors is in the process of claiming incentives under the Auto PLI scheme for eligible EV models.

Customer Sentiment:

  1. CV Segment: Fleet utilization remained healthy in Q1, indicating positive customer sentiment.
  2. PV Segment: Despite some softness in retail sales, inquiries remained firm, suggesting potential demand recovery.
  3. JLR: Strong demand continues for premium models like Range Rover and Defender, particularly in markets like the US and UK.

Top 3 Takeaways:

  1. Resilient Performance: Tata Motors demonstrated strong financial performance in Q1 FY2025, with improved profitability despite modest volume growth.
  2. Strategic Restructuring: The announced demerger of CV and PV businesses, along with the Tata Motors Finance merger, signals a significant restructuring to unlock shareholder value.
  3. EV and Premium Focus: The company continues to invest in EV development and capitalize on strong demand for premium JLR models, positioning itself for future growth in these segments.

MK-AW924_tatamo_G_20090628180619

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The notice mentioned the following.
“According to the company, cancellation of the ‘A’ Ordinary Shares and the consequent issuance and allotment of the Ordinary Shares will be treated as ‘Deemed Dividend’ to the extent of accumulated profits as on the Effective Date and shall be subject to applicable taxes (including deduction/withholding of taxes).”

Can someone explain the meaning of this?

For example,
Tata motors price = 100
Tata motors DVR price = 70
I have100 DVR shares bought at price 50.
So, my capital gain on DVR shares = 20 * 100 = 2000
WIll this 2000 be considered as dividend income?

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Very clear explanation. As there is lot of moving parts in Tata Motors ( If china slows down then JLR sells gets hurt, if Europe slows down again JLR sells gets hurt, if indian manufacturing slows down then CV sales gets hurt, if registration and other charges starts to be leaved on electric cars then their EV sales will slow down). Many are considering Tata’s are building strongest cars with 5 star rating but in reality they are building low quality cars and selling it through worst dealer network. In social medias we can see how many new car owners are complaining against their new cars built quality and their service experience in Tata’s dealerships compared to other brand. With these many issue I think Tata Motor cannot command high valuation.

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