October 7, 2024
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Stock Market

Tata motors vs Mahindra & Mahindra

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Stock Market

Tata motors vs Mahindra & Mahindra

In India, vehicles are essential for daily life. Tractors help farmers transport their goods to markets, while cars allow families to travel easily. Together, they connect rural and urban areas, supporting both agriculture and city living. Tata Motors and Mahindra & Mahindra stand at the forefront of this automotive evolution.

Their rivalry reflects broader trends in innovation and consumer preference. This article will explore their financial performance, future prospects, market segments, and share dynamics, revealing how these giants navigate the competitive landscape. Let’s begin!

Industry Overview

The Indian automobile industry is a vital part of the economy, contributing 7.1% to the GDP. In FY24, it produced 28.43 million vehicles, including cars and two-wheelers. The industry is expected to grow from $126.67 billion in 2024 to $187.85 billion by 2029, at a CAGR of 8.20%. Passenger car sales are also increasing, projected to rise from $39.82 billion in 2024 to $54.76 billion by 2030.

The commercial vehicle sector grew by 2%, reaching over 1 million units in FY24. The government aims for 30% of new vehicle sales to be electric by 2030, promoting sustainable transport. Additionally, the agricultural tractor market is set to grow from $7.42 billion in FY24 to $10.28 billion in FY29, reflecting a CAGR of 6.70% from 2024-2029.

Company Overview Of Tata Motors

Tata Motors was established in 1945 and headquartered in Mumbai, India. The company is a part of Tata Group and was promoted by J. R. D. Tata. Tata Motors is a leading global automobile manufacturer with a diverse portfolio that includes cars, trucks, buses, and defense vehicles. The company operates in over 125 countries and employs more than 91,000 people. The company is recognized for producing well-known brands such as Jaguar, Land Rover, and Tata Motors itself.

Market share in FY24

39.1% Market share in the commercial vehicle segment
13.9% market share in Passenger Vehicle Segment
73.1% market share in domestic electric vehicle segments.
48.8% market share in Heavy Goods and Motor Vehicles
37.5% market share in Medium Goods Vehicles
34.3% market share in Light Goods Vehicles
35% market share in commercial passenger vehicles

Segments Analysis of Tata Motors

Tata Motors Limited has diversified its product portfolio into commercial vehicles, passenger vehicles, electrical vehicles, Jaguar Land Rover, and Tata Motors Finance. Tata Motors has 25 manufacturing facilities and 9 research and development sites. The table shows the units sold and their revenue by Tata Motors in FY24.

Company Overview Of Mahindra & Mahindra

Mahindra & Mahindra was established in 1945 and is a key player in the Mahindra Group. The company specializes in manufacturing sport utility vehicles, trucks, and farm tractors. Mahindra & Mahindra is recognized as the world’s leading tractor manufacturer by volume and a significant contributor to the automotive sector in India. The company has expanded its operations to over 100 countries and has a workforce of more than 260,000 employees.

Market Share in FY24

20.4% market share of total SUV revenue
49% market share in less than 3.5T light commercial vehicles.
41.6% market share in Farm Equipment
58.7% market share in eclectic three-wheeler vehicles

Segment Analysis Of Mahindra and Mahindra

Mahindra and Mahindra have diversified their product portfolio into tractors and automotive vehicles, which include passenger vehicles, commercial vehicles, three-wheelers, and automotive exports. The company has 47 manufacturing plants across India. The table shows the units sold by Mahindra and Mahindra in FY24.

Financial Analysis Of Tata Motors Vs Mahindra & Mahindra

Revenue and Net Profit

Coming into the financial analysis of Tata Motors and Mahindra & Mahindra, the revenue of both companies has increased over the last five years. Tata Motors Limited’s revenue has increased from ₹261,068 crore in FY20 to ₹437,928 crore in FY24, which has grown at a CAGR of 13.81% over the last four years.

In FY24, Tata Motors Limited’s revenue grew by 26.58%, from ₹345,967 crore to ₹437,928 crore as compared to the previous year. The revenue mainly comes from India by 29.17%, North America by 15.41%, China by 13.06%, Europe by 12.68%, the UK by 12.56%, and other countries by 17.12%.

Mahindra and Mahindra Limited’s revenue has increased from ₹75,382 in FY20 to ₹139,078 crore in FY24, which has grown at a CAGR of 16.55% over the last four years. In FY24, Mahindra and Mahindra Limited’s revenue has grown by 14.6%, from ₹121,362 crore to ₹139,078 crore as compared to the previous year. The revenue mainly comes from India by 88.56% and other countries by 11.44% in FY24.

Tata Motors Limited’s net loss has turned into net profit. The company has shifted its net loss from -₹11,975 crore in FY20 to ₹31,807 crore in FY24. Notably, the net profit of Tata Motors Limited has grown by 1082.42%, from ₹2,690 crore in FY23 to ₹31,807 crore in FY24.

Mahindra and Mahindra Limited also diverted its net loss into net profit in the year 2021. The company’s net profit has grown from ₹1,512 crore in FY21 to ₹12,270 crore in FY24, which has grown at a CAGR of 100.95% over the last 3 years. In FY24, the net profit of the company has grown by 7.88%, from ₹11,374 crore in FY23 to ₹12,270 crore in FY24.

Profitability Ratios

Tata Motors Limited’s negative operating profit margin has shifted into a positive operating profit margin. In FY24, the company’s OPM increased from 3.37% in FY23 to 8.72% in FY24. The NPM of Tata Motors also grew from 0.68% in FY23 to 7.10% in FY24. The average five years of OPM and NPM of Tata Motors have been 4.20% and -1.23%, respectively.

Mahindra and Mahindra Limited’s average operating profit margin for the last five years will be 14.67%. In FY24, the company has improved its OPM margin from 14.12% in FY23 to 16.15% in FY24. Mahindra and Mahindra Limited’s net profit margin has slightly decreased from 8.13% in FY23 to 8.06% in FY24. The average NPM of the last five years of M&M Limited has to be 4.14%.

Return Ratios

Tata Motor’s return on equity has massively improved from 5.32% in FY23 to 36.97% in FY24. In M&M, ROE has decreased from 18.24% to 17.02% in FY24. In contrast, Tata Motors has a better ROE compared to Mahindra and Mahindra in FY24. The average ROE of Tata Motor and M&M has to be -5.37% and 10.77%, respectively.

Tata Motors Limited’s ROCE has tripled from 6.45% in FY23 to 19.39% in FY24. It has an average ROCE of 6.67% in the last 5 years. The ROCE of M&M has increased from 12.66% in FY23 to 13.89% in FY24. In comparison, Tata Motors has a better ROCE compared to Mahindra and Mahindra in FY24. In the average ROCE of the last five years, Mahindra and Mahindra have been better compared to Tata Motors.

Debt Analysis

Tata Motors has declined its debt-to-equity ratio from 2.77x in FY23 to 1.16x in FY24. Mahindra and Mahindra Limited has slightly reduced its debt-to-equity ratio, which is from 1.57x in FY23 to 1.56x in FY24. In comparison, Tata Motors is better than Mahindra and Mahindra Limited in FY24.

Tata Motors Limited interest coverage ratio has improved from 3.57x in FY23 to 6.56x in FY24. M&M’s interest coverage ratio decreased from 3.69x in FY23 to 3.61x in FY24. In contrast, Tata Motors has a better interest coverage ratio compared to Mahindra and Mahindra Limited in FY24.