ICICI Direct: Tata Motors Deleveraging Intent Fuels Optimism  
A logo sits on the front of Tata Motors Ltd.’s new Nexon sports utility vehicle SUV during a launch event in Mumbai, India (Photographer Dhiraj Singh/Bloomberg)

ICICI Direct: Tata Motors Deleveraging Intent Fuels Optimism  

Bookmark

BQ Blue’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages. These reports offer BloombergQuint’s subscribers an opportunity to expand their understanding of companies, sectors and the economy.

ICICI Direct Report

Media reports suggest that the top management of Tata Motors Ltd. at its recent Annual General Meeting expressed an intent to reduce automotive debt (approximately Rs 48,000 crore as of FY20) to near zero levels in the next three years.

This follows the recent guidance of turning Jaguar Land Rover, Indian operations sustainably free cash flow positive (from FY22E, FY21E respectively).

While the intent is encouraging, we remain slightly circumspect about the deleveraging timeline, given that positive FCF from FY22E will continue to be accompanied by critical capex for new product development and new age technologies i.e. autonomous, connectivity, electric and shared mobility (ACES).

As per our estimates, complete automobile segment deleveraging could happen sometime in FY24E-25E, provided -

1.Indian and JLR operations do not disappoint on the volume or operating matrix front and 2. the global business remains buoyant during this time.

We await greater detail about the proposed deleveraging plan. However, the intent of creating shareholder value through meaningful debt reduction as well as the strong response to new model launches at Tata Motors makes us turn positive on the stock.

Click on the attachment to read the full report:

ICICI Direct TataMotors Company Update.pdf

DISCLAIMER

This report is authored by an external party. BloombergQuint does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the brokerage and do not represent the views of BloombergQuint.

Users have no license to copy, modify, or distribute the content without permission of the Original Owner.

BQ Install

Bloomberg Quint

Add BloombergQuint App to Home screen.