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Hushed quarter; best likely behind across businesses

TTMT’s Q4 results were muted with limited margin expansion across businesses despite higher volumes. Company remains cautiously optimistic across businesses, with H1 expected to be weaker and the premium luxury segment seen as resilient amid overall emerging demand concerns. While deleveraging progress continues, we believe the best may be behind for all businesses amid i) declining orderbook, normalizing mix, and higher customer acquisition costs at JLR, with FCF generation to normalize; ii) flattish growth outlook for domestic CV space; and iii) moderating India PV outlook (though TTMT to outperform on new launches). FY25E/26E EPS is largely unchanged (we buildin consol. revenue/EBITDA CAGR of 7/8% over FY24-26E); we retain our REDUCE rating, with unchanged SOTP-based TP of Rs950/share.

Results below estimates

Consol. revenue/EBITDA was higher 13%/33% YoY. Margins at 14.2% were higher by 30bps QoQ albeit lower than anticipated. Consol. FCF (automotive) for Q4FY24 stood at Rs141bn, whereas net automotive debt further reduced to Rs160bn. JLR revenue rose by 11% YoY to ~GBP7.9bn, with stable EBITDA margin QoQ at 16.3%, and net debt now reduced to GBP0.7mn. Standalone revenue was flattish YoY, with EBITDA margin placed at 12% vs. 11.4% in Q3. The PV-ICE business delivered double-digit margin, with EV business margin positive at 1.1% (pre-R&D expenses).

Earnings Call KTAs

1) JLR: Orderbook stands at 133K units (150K in Q3) – still ~25K units higher than normal levels; would continue to draw-down over coming months; demand is currently challenged in markets like Europe and the UK, stronger in North America, and stable in China; Company guided for stable EBIT margin in FY25 (~8.5%), with rising customer acquisition costs (variable and fixed marketing spends) being offset by raw material costsaving efforts and better mix. Range Rover BEV has 33K customers in waiting; Company would work to convert this into bookings shortly. Capex guidance for FY25 hiked to GBP3.5bn (GBP3.3bn in FY24); expects Q1 to see FCF breakeven due to working capital reversal. Focus remains on further deleveraging, with the net cash guidance for FY25E and the 10% EBIT margin guidance for FY26E retained. 2) India CVs: Expects flattish to slightly negative performance by the industry for the full year; customer sentiment, freight rates, utilization levels remain intact. Company expects some impact from DFC operationalization on the North-West route; industry mix seen continuing to evolve in favor of higher tonnage trucks; the cycle is expected to be smoother than earlier instances. Some commodity increases are seen this year; TTMT would pass on the same with necessary price hikes. 3) India PVs: Expects sub-5% industry growth this year amid strong base and high inventory levels; TTMT seen performing better with new launches lined up (mid-size SUV Curvv in H2CY24, Sierra in H2CY25). Company maintains focus on EVs but would evaluate development of other options like hybrids in future.

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