How numbers stack up for Tata Motors’ CV and PV biz amidst its demerger

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Tata Motors Ltd aims to derive immense benefits from the demerger of the company into two units by focusing on expanding the passenger, commercial, and JLR businesses individually.

Currently, the mix is heavily tilted in the favour of the passenger business which brings in the bulk of the revenues for the Indian automaker.

During FY2022-23, Tata Motors’ PV, including JLR, accounted for 79 percent of the company's Rs 3,41,544 crore revenue while CVs contributed 21 percent.

The Tata Motors board on Monday approved the demerger of the company’s business into two separate units, Commercial Vehicles (CV) & its related investments under one entity and Passenger Vehicle (PV) businesses including PV, Electric Vehicles (EV), Jaguar Land Rover (JLR) and its related investments in another entity.

“This move will empower both entities to pursue their respective strategies to deliver higher growth with greater agility while reinforcing accountability,” the company said in a statement.

Tata Motors said over the past few years the CV, PV, and JLR businesses have delivered a “strong performance” by successfully implementing “distinct strategies”. It also stated that since 2021 these businesses have been operating independently under their respective CEOs.Dissecting the segments
With all automotive verticals continuing their profitable growth trajectory, Tata Motors delivered a strong performance in Q3 FY24 at a consolidated level, with revenue of about Rs 1,10,600 crore (up 25.0 percent), EBITDA at about Rs 15,800 crore (up 60.6 percent) and net profit was about Rs 7,100 crore.

Its luxury car arm JLR also reported increased sales volumes for the third quarter of FY24 (three-month period to December 31, 2023), reflecting improvements in supply as more vehicles were delivered to clients. Revenue for the quarter was £7.4 billion, up 22 percent versus Q3 FY23 and up 8 percent versus Q2 FY24.

JLR’s wholesale volumes for the period stood at 101,043 units (excluding the Chery Jaguar Land Rover China JV), up 27 percent compared to the same quarter a year ago and up 4 percent compared to the quarter ended September 30, 2023.

Its Tata Motors brand of PVs, saw its volumes grow 5 percent YoY at 1,38,600 units supported by a strong supply situation, new SUV facelifts, and robust demand during the festive period.

The company, which launched a face-lifted version of Nexon (both ICE and EV), saw its PV revenues going up by 10.6 percent YoY at Rs 12,900 crore during Q3 FY24. The company claimed that its EV business EBITDA margins pre-R&D spending were near break-even.

In Q3 FY24, its domestic wholesale CV volumes were 91,900 units, marginally higher at 1.1 percent YoY. Exports stood at 4,800 units, up 14 percent YoY. Its revenues rose 19.2 percent to Rs 20,100 crore in Q3 on account of “salience towards medium and heavy commercial vehicles” and “better market operating price”.

During February, Tata Motors witnessed a 20 percent growth in PV sales at 51,267 units while CVs remained a drag on a high base. While the volumes of domestic PVs (including EVs) grew 19 percent YoY at 51,321 units, domestic EV sales grew 30 percent YoY at 6,923 units and contributed 13.5 percent to total PV sales versus 13 percent in January 2024.

In February, domestic CV sales declined 4.5 percent YoY at 35,085 units, with HCV sales down 15 percent at 10,091 units, and intermediate, light and medium commercial vehicle sales down 6 percent at 5,083 units.