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Passenger vehicle (PV) segment
-Management expects India's passenger vehicle or PV industry to touch 6m units by FY30F, a CAGR of 6%. Expects fuel mix of 25:20:5:50 for CNG, EV, diesel and gasoline vehicles.
- Tata Motors plans to grow faster than the industry by improving its addressable market from 53% to 80% led by new name plates and powertrain options (EV and CNG).
- In the gasoline PV business, the company aims to scale to double-digit EBITDA margin and maintain capex at ~6-8% of the revenue with positive & growing cash flow.
- In the electric vehicle or EV business, it plans to maintain leadership in the industry and achieve a 30% penetration in its portfolio by FY30F. Management plans EBITDA breakeven by FY26F driven by softening battery costs and volume scale-up benefits.
Commercial vehicle (CV) segment
- Management gave guidance of a 4-5% CV industry volume growth till FY30F. It aims to stabilize the cyclicality of the CV business via new launches (vans and small EV trucks) and provide fleet management support to customers with the help of non-vehicle business revenue.
- Tata Motors has organized itself into eight verticals in the CV business to deliver superior value to its customers. Overall market shares remain steady, with trucks continuing to remain strong while witnessing green shoots in SCV, and the target is to win back market share in the small commercial vehicle or SCV segment.
- The aim is to improve the EBITDA margin by 200bp+ in the coming years, led by growth in the non-vehicle business, improved retail product mix and cost structure optimization. RoCE (pre-tax) improved from 21% in FY23 to 36% in FY24F which, management feels, can go up further.
- The endeavour is to post market-leading revenue growth with double-digit EBITDA margin and free cash flow or FCF in the range of 6-8% of revenue. The plan is to incur a capex of 2-4% of the revenue.
- Tata Motors plans to scale up its digital businesses to US$1bn by FY30F - Fleet Age, Freight Tiger, E-dukan and Fleet Verse.
- EV plan: Tata Motors plans to tap the leasing option for FAME bus supplies to improve the RoCE. New EV heavy duty trucks are planned to address select addressable segments with predictable load and route.
- Post demerger of its businesses, considering the superior RoCE and FCF sustainability of the CV business, we feel, there will be better value creation in the medium term. |
