What Are The Key Sources Of Revenue For Tata Motors?

by Trefis Team
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Tata Motors (NYSE: TTM), a subsidiary of Tata group, is an Indian automaker. While a major portion of its revenue is derived from the manufacturing of automobiles, the company’s other businesses include IT services, machine tools, and factory automation solutions, which form a rather small percentage of its total revenue. According to Trefis estimates, TTM will derive ~74% of its revenues from Jaguar Land Rover (JLR) division in 2019. We expect a total revenue of $46.6 billion for TTM in 2019.

We have a $19 price estimate for the company, which is around 7% higher than the current market price. The charts have been made using our new, interactive platform. You can modify key drivers to arrive at your own estimate by clicking on our interactive dashboard on – Price Estimation for Tata Motors

Of late, the company’s JLR division has remained weak due to unfavorable market conditions in the UK and EU, causing the investors to lose confidence in the stock. Regulatory authorities in the UK and EU, JLR’s key markets, are imposing additional restrictions on diesel vehicles as they strive for a cleaner environment, resulting in less demand for diesel automobiles. Further, Since JLR has a diesel-dominated portfolio, the division’s sales volumes have grown at a slow pace because of Volkswagen’s diesel scandal.

A shift in consumer demand toward electrification has also resulted in the weakening of the overall automotive market. However, JLR’s recently launched a luxury variant I-Pace, a pure battery operated vehicle, which is expected to support the company’s declining sales of other variants to a certain extent. The retail sales for the JLR division increased marginally by 2% year-on-year in 2018. We expect this trend to continue and the division is likely to generate $34 billion revenue in 2019.

In addition, Tata Motors’ Other Brand Vehicles have shown signs of recovery, with a 60% increase in revenues contributed by the company’s domestic brand as a result of its turnaround strategy. Additionally, the company has a brighter outlook in China, which could positively impact the company’s sales volume and, in turn, revenue.

 

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