News

Published: May 20, 2024
Updated: May 20, 2024

Tata Motors Announces Rs 43,000 Crore Investment in FY25

Major Investment in Products and Technologies:

Mumbai-based automotive giant Tata Motors has revealed plans to invest Rs 43,000 crore in products and technologies for the fiscal year 2024-25. This investment slightly surpasses the Rs 41,200 crore allocated in FY24. The British subsidiary, Jaguar Land Rover (JLR), will receive the majority of this funding.

Jaguar Land Rover's Significant Allocation:

Jaguar Land Rover is set to receive around Rs 35,000 crore, marking a 6% increase from the Rs 33,000 crore invested in FY24. Meanwhile, Tata Motors' direct investments will remain steady at approximately Rs 8,000 crore. P.B. Balaji, Group CFO of Tata Motors, emphasized that these investments are focused on advancing products and technologies for both JLR and Tata Motors.

Upcoming Launches and Strategic Focus:

JLR is preparing to launch two significant models this year: the Range Rover BEV and the Defender Octa. Balaji highlighted that the increased investment is driven by JLR's comprehensive product plans coming to fruition.

Financial Projections and Debt Reduction:

Analysts project that capital expenditure for JLR will be around £3.5 billion in FY25. They also expect JLR to be net debt-free by FY25, a significant improvement from its current net debt of £0.7 billion, despite the planned capex. The reduction in JLR's net debt from £1.57 billion to £732 million in the October-December quarter is a promising sign. Tata Motors' Indian automotive operations are already net debt-free, and the company aims for the consolidated auto level to achieve the same by FY25.

Stable Margins Amid Cost Pressures

Motilal Oswal analysts predict stable margins for JLR over FY24-26. They acknowledge the rising cost pressures due to investments in demand generation, normalization of product mix, and the ramp-up of electric vehicles (EVs), which may initially impact margins. However, these investments are crucial for sustaining long-term growth.

Boost in Indian Passenger Vehicle Segment:

Tata Motors' Indian passenger vehicle (PV) business is expected to benefit from upcoming launches. New models like the Curvv SUV, slated for later this year, and the Sierra, scheduled for next year, are anticipated to drive growth in this segment.Tata Motors' substantial investment in products and technologies reflects its commitment to innovation and market expansion. The focus on reducing net debt and launching new models positions both Tata Motors and JLR for a strong financial future. With stable margins and strategic product developments, Tata Motors is poised for significant growth in the coming years.