Tata Motors reports 21.1% EBITDA growth and 0.91 pp EBITDA Margin growth from 13.5% to 14.4%

26-05-2015 • About Tata Motors ($TATAMOTORS) • By InTwits

Tata Motors reported FY2015 financial results today. Overall the company's long term financial model is characterised by the following facts:

Tata Motors is a fast growth stock: FY2015 revenue growth was 13.4%, 5 year revenue CAGR was 23.4% at FY2015 ROIC 17.8%
Tata Motors has medium CAPEX intensity: 5 year average CAPEX/Revenue was 9.9%. At the same time it's a lot of higher than industry average of 3.7%.
CAPEX is quite volatile: 319,622 in FY2015, 269,751 in FY2014, 188,626 in FY2013, 138,756 in FY2012, 81,240 in FY2011
The company has highly profitable business model: ROIC is at 17.8%

Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.

Tata Motors ($TATAMOTORS) key annual financial indicators

mln. INR	2011	2012	2013	2014	2015	2015/2014
P&L
Revenue	1,199,526	1,627,934	1,848,479	2,279,459	2,585,425	13.4%
EBITDA	154,700	200,383	224,942	307,838	372,648	21.1%
Net Income	92,736	135,165	98,926	139,910	139,863	-0.0%
Balance Sheet
Cash	109,328	164,769	198,109	294,593	321,158	9.0%
Short Term Debt	209,436	232,652	259,536	205,457	216,158	5.2%
Long Term Debt	172,560	279,625	321,553	452,586	560,713	23.9%
Cash flow
Capex	81,240	138,756	188,626	269,751	319,622	18.5%
Ratios
Revenue growth	32.6%	35.7%	13.5%	23.3%	13.4%
EBITDA growth	144.8%	29.5%	12.3%	36.9%	21.1%
EBITDA Margin	12.9%	12.3%	12.2%	13.5%	14.4%	0.9%
Net Income Margin	7.7%	8.3%	5.4%	6.1%	5.4%	-0.7%
CAPEX, % of revenue	6.8%	8.5%	10.2%	11.8%	12.4%	0.5%
ROIC	19.3%	20.1%	16.6%	17.2%	17.8%	0.6%
ROE	67.7%	52.1%	28.1%	27.1%	23.0%	-4.2%
Net Debt/EBITDA	1.8x	1.7x	1.7x	1.2x	1.2x	0.0x

Revenue and profitability

Tata Motors's Revenue surged on 13.4% in FY2015. Revenue growth happened at the same time with EBITDA margin expansion. EBITDA Margin increased slightly on 0.91 pp from 13.5% to 14.4% in FY2015.

Net Income marign decreased slightly on 0.73 pp from 6.1% to 5.4% in FY2015.

Capital expenditures (CAPEX) and working capital investments

In FY2015 the company had CAPEX/Revenue of 12.4%. CAPEX/Revenue increased on 3.8 pp from 8.5% in FY2012 to 12.4% in FY2015. For the last three years the average CAPEX/Revenue was 11.5%.Tata Motors invested a big chunk of EBITDA (85.8%) to CAPEX to fuel its growth.

Return on investment

The company operates at high and attractive ROE (22.95%) while ROIC is a bit lower (17.84%). ROIC increased slightly on 0.62 pp from 17.2% to 17.8% in FY2015. ROE decreased on 4.2 pp from 27.1% to 23.0% in FY2015.

Leverage (Debt)

Company's Net Debt / EBITDA is 1.2x and Debt / EBITDA is 2.1x. Net Debt / EBITDA increased on 0.042x from 1.2x to 1.2x in FY2015. Debt jumped on 18.1% in FY2015 while cash increased on 9.0% in FY2015.

Valuation

Tata Motors's trades at EV/EBITDA 1.6x and P/E 1.1x while industy averages are 10.5x and 26.1x. Tata Motors's EV/(EBITDA-CAPEX) is 11.5x with the industry average at 4.7x.

Appendix 1: Peers in Commercial Vehicles

Below you can find Tata Motors benchmarking vs. other companies in Commercial Vehicles industry. It's shown for the period of 5 years for the key financial metrics. Each table has median value for all the companies in the industry together with individual financial data of the top-5 companies in the industry by particular financial metric.

Top companies by Revenue growth, %


Top 5	FY2011	FY2012	FY2013	FY2014	FY2015
V.S.T.Tillers Tractors ($VSTTILLERS)	-36.0%	24.2%	-9.2%	29.6%
Trf ($TRF)	-16.6%	19.2%	-16.0%	5.4%
Beml ($BEML)	-17.6%	2.7%	3.2%	3.7%
Ashok Leyland ($ASHOKLEY)		15.5%	-3.3%	-8.0%	33.6%
Abg Shipyard ($ABGSHIP)		18.2%	-17.2%	-20.5%	-72.9%
Median (6 companies)	-17.1%	16.8%	-12.6%	-2.2%	-19.7%
Tata Motors ($TATAMOTORS)		35.7%	13.5%	23.3%	13.4%

Top companies by EBITDA margin, %


Top 5	FY2011	FY2012	FY2013	FY2014	FY2015
Abg Shipyard ($ABGSHIP)	27.1%	28.0%	31.2%	27.1%	-59.0%
V.S.T.Tillers Tractors ($VSTTILLERS)	17.0%	14.0%	15.1%	19.2%
Ashok Leyland ($ASHOKLEY)	11.0%	9.7%	7.0%	4.1%	10.7%
Beml ($BEML)	4.1%	4.8%	-1.5%	4.0%
Trf ($TRF)	2.2%	6.3%	-1.5%	1.3%
Median (6 companies)	7.5%	8.0%	2.8%	4.1%	-22.8%
Tata Motors ($TATAMOTORS)	12.9%	12.3%	12.2%	13.5%	14.4%

Top companies by CAPEX/Revenue, %


Top 5	FY2011	FY2012	FY2013	FY2014	FY2015
Abg Shipyard ($ABGSHIP)	17.0%	21.0%	9.1%	15.2%	3.7%
V.S.T.Tillers Tractors ($VSTTILLERS)	1.3%	2.4%	6.7%	5.9%
Ashok Leyland ($ASHOKLEY)	3.2%	5.4%	5.2%	3.6%	1.6%
Beml ($BEML)	6.4%	4.4%	4.8%	1.5%
Trf ($TRF)	2.9%	1.5%	1.1%	0.4%
Median (6 companies)	3.0%	3.4%	5.0%	2.5%	2.7%
Tata Motors ($TATAMOTORS)	6.8%	8.5%	10.2%	11.8%	12.4%

Top companies by ROIC, %


Top 5	FY2011	FY2012	FY2013	FY2014	FY2015
V.S.T.Tillers Tractors ($VSTTILLERS)	45.9%	36.4%	29.3%	41.0%
Cranex ($CRANEX)		5.5%	5.3%	5.2%
Abg Shipyard ($ABGSHIP)	11.8%	12.0%	8.8%	5.0%	-4.8%
Beml ($BEML)	2.3%	2.6%	-2.9%	1.9%
Trf ($TRF)	3.3%	11.4%	-4.1%	0.5%
Median (12 companies)	11.5%	10.6%	5.8%	1.2%	1.4%
Tata Motors ($TATAMOTORS)	19.3%	20.1%	16.6%	17.2%	17.8%

Top companies by Net Debt / EBITDA


Top 5	FY2011	FY2012	FY2013	FY2014	FY2015
Trf ($TRF)	11.2x	5.2x		36.0x
Ashok Leyland ($ASHOKLEY)	2.0x	2.5x	5.0x	17.8x	5.0x
Abg Shipyard ($ABGSHIP)	4.3x	4.6x	6.6x	11.7x
Cranex ($CRANEX)	6.1x	10.0x	9.9x	9.0x
Beml ($BEML)	6.9x	5.8x		8.0x
Median (7 companies)	3.3x	3.9x	2.5x	9.0x	2.5x
Tata Motors ($TATAMOTORS)	1.8x	1.7x	1.7x	1.2x	1.2x

Tata Motors stock price chart

Tata Motors financials

mln.	FY2010	FY2011	FY2012

Revenue	904,568	1,199,526	1,627,934
EBITDA	63,186	154,700	200,383
Net income	25,711	92,736	135,165
CAPEX	84,754	81,240	138,756
Debt	422,927	381,996	512,277
Cash	87,433	109,328	164,769

About Tata Motors

Tata Motors Limited, together with its subsidiaries, develops, designs, manufactures, assembles, and sells commercial and passenger vehicles in India. It offers micro, compact, and midsize cars and utility vehicles; light, intermediate, medium, and heavy commercial vehicles; vans, trucks, buses, and defense vehicles; and premium, luxury, and sports cars, as well as all-terrain vehicles (ATVs). The company also manufactures engines for industrial and marine applications; and aggregates, such as axles and transmissions for commercial vehicles and factory automation equipment, as well as offers information technology services. In addition, it is involved in the manufacture of automotive vehicle components, construction equipment, and high-precision tooling and plastic and electronic components for automotive and computer applications, as well as automotive retailing and service operations; and supply chain and vehicle financing activities. Further, the company provides engineering and automotive solutions, machine tools, and factory automation solutions, as well as insurance solutions in retail segment, and services to various original equipment manufacturers; and develops electric and hybrid vehicles for personal and public transportation; and develops powertrains and other technologies. It offers its products under the Nano, Indica, Indica Vista, Indigo, Indigo Manza, Sumo, Sumo Grande, Safari, Safari Storme, Aria, and Venture brand names; alternative fuel vehicles under the Nano and Indigo brands; and luxury cars and premium ATVs under the Jaguar Land Rover brand name. The company sells its products through dealership, sales, services, and spare parts network. It also exports its products to Europe, Africa, the Middle East, South East Asia, and South Asia. The company was formerly known as Tata Engineering and Locomotive Company Limited and changed its name to Tata Motors Limited in July 2003. Tata Motors Limited was founded in 1945 and is based in Mumbai, India.