This achievement comes amidst a continued surge in its stock, which has risen over 50% this year and more than 101% in 2023. The company's triumph is underscored by its impressive market cap surpassing that of Stellantis NV, General Motors, Maruti Suzuki India, and several other notable automotive firms.
Globally, Tesla Inc maintains the lead with a market cap of USD 711.19 billion, followed by Toyota Motors at USD 307.50 billion, and BYD Company at USD 92.65 billion. Ferrari NV ranks fourth with a market cap of USD 74.02 billion, trailed by Mercedes-Benz Group (USD 71.26 billion), Porsche (USD 68.29 billion), BMW AG (USD 59.54 billion), Volkswagen AG (USD 58.18 billion), and Honda Motor Co (USD 56.12 billion). Tata Motors has managed to surpass international giants like Stellantis NV (USD 50.64 billion), General Motors (USD 49.74 billion), and others, establishing a notable presence in the global market.
The considerable rise in Tata Motors' stock is attributed to high expectations and a substantial turnaround in the company's passenger vehicle segment, particularly with Jaguar Land Rover (JLR) on a profitable growth trajectory. The company's dominant position in the Indian electric vehicle market also plays a critical role. Yet, despite leading in electric cars within India, the EV business has not achieved breakeven at the EBITDA level, with continuing investment necessary to bolster sales.
Analysts have noted Tata Motors' ambition to launch new electric vehicle models and its goal to achieve 50% of volumes from EVs by 2030, a move likely to generate substantial value. While the passenger vehicle business presents complexities, JLR remains a significant source of revenue and earnings, even as it navigates the EV transition amidst competition. Improvement in semiconductor chip supply has aided JLR, reducing the order backlog and enabling better customer service, while demand continues to strengthen with new models poised to boost volumes.
Nomura, in a recent note, maintains a 5% volume compound annual growth rate (CAGR) forecast for FY25-27F, expecting EBITDA margins to hold around 11.5% due to robust demand. Although flat to negative growth guidance is possible for FY25F, potential upside could come from the e-bus segment. The note also highlighted that despite signs of weakening demand in both industry passenger vehicles (PVs) and EV segments, upcoming launches like Curvv and Harrier EV in FY25F should support volumes. Market share is projected to remain stable at 14% with a target of 18-20% by FY30F.
“The stock has risen over 50% this year and over 101% in 2023, with a market cap of USD 51 billion, the highest among Indian auto companies.”
Amidst this growth, Tata Motors announced its plan to demerge into two entities, a move welcomed by analysts. Post-demerger, Tata's passenger vehicle business will include the domestic EV segment and Jaguar Land Rover, presenting investment opportunities in both the domestic and global premium markets. Sharekhan suggested that this strategic move allows investors to capitalize on mass-market PV growth, potentially challenging Maruti Suzuki's dominance.
All attention is now on Tata Motors' upcoming earnings release on August 1. A poll predicting revenue of INR 1.09 trillion and net profit of INR 5,310 crore sets high expectations. Bloomberg reports that Tata Motors currently has 24 buy ratings, 6 hold ratings, and 5 sell ratings from analysts. The company's strategic initiatives and market performance continue to be watched keenly by investors and analysts alike.
Analyzing Tata Motors' performance, it is clear that the firm has strategically positioned itself to leverage the growing EV market while maintaining a strong foothold in traditional automotive sectors. The consistent growth in stock value reflects investor confidence and an optimistic outlook for future growth. The demerger strategy and continuous innovation in EVs represent a forward-thinking approach catering to evolving market dynamics.
“Tata Motors' market cap surpasses that of Stellantis NV (USD 50.64 billion), General Motors (USD 49.74 billion), Maruti Suzuki India (USD 48.36 billion), Mahindra & Mahindra (USD 43.41 billion), Ford Motor Co (USD 43.1 billion), Hyundai Motor (USD 37.88 billion), and KIA Corp (USD 32.29 billion).”
The company's impressive turnaround is a testament to strategic planning and execution, positioning Tata Motors to challenge industry giants on a global scale. The inclusion in the top ten most valued global automotive firms underscores Tata Motors' significant progression and sets a precedent for other Indian companies aspiring to achieve similar feats on the international stage. The company's continued investment in the EV segment and strategic market positioning suggest a robust potential for sustained growth in the future.
(Source- Moneycontrol)
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