Tata motors vs Mahindra & Mahindra – Who will win the automobile war? Trade Brains Trade Brains

In India, vehicles are essential for daily life. Tractors help farmers transport their goods to markets, while cars allow families to travel easily. Together, they connect rural and urban areas, supporting both agriculture and city living. Tata Motors and Mahindra & Mahindra stand at the forefront of this automotive evolution.

Their rivalry reflects broader trends in innovation and consumer preference. This article will explore their financial performance, future prospects, market segments, and share dynamics, revealing how these giants navigate the competitive landscape. Let’s begin!

Industry Overview

The Indian automobile industry is a vital part of the economy, contributing 7.1% to the GDP. In FY24, it produced 28.43 million vehicles, including cars and two-wheelers. The industry is expected to grow from $126.67 billion in 2024 to $187.85 billion by 2029, at a CAGR of 8.20%. Passenger car sales are also increasing, projected to rise from $39.82 billion in 2024 to $54.76 billion by 2030.

The commercial vehicle sector grew by 2%, reaching over 1 million units in FY24. The government aims for 30% of new vehicle sales to be electric by 2030, promoting sustainable transport. Additionally, the agricultural tractor market is set to grow from $7.42 billion in FY24 to $10.28 billion in FY29, reflecting a CAGR of 6.70% from 2024-2029.

Company Overview Of Tata Motors

Tata Motors was established in 1945 and headquartered in Mumbai, India. The company is a part of Tata Group and was promoted by J. R. D. Tata. Tata Motors is a leading global automobile manufacturer with a diverse portfolio that includes cars, trucks, buses, and defense vehicles. The company operates in over 125 countries and employs more than 91,000 people. The company is recognized for producing well-known brands such as Jaguar, Land Rover, and Tata Motors itself.

Market share in FY24

39.1% Market share in the commercial vehicle segment

13.9% market share in Passenger Vehicle Segment

73.1% market share in domestic electric vehicle segments.

48.8% market share in Heavy Goods and Motor Vehicles

37.5% market share in Medium Goods Vehicles

34.3% market share in Light Goods Vehicles

35% market share in commercial passenger vehicles

Segments Analysis of Tata Motors

Tata Motors Limited has diversified its product portfolio into commercial vehicles, passenger vehicles, electrical vehicles, Jaguar Land Rover, and Tata Motors Finance. Tata Motors has 25 manufacturing facilities and 9 research and development sites. The table shows the units sold and their revenue by Tata Motors in FY24.

Company Overview Of Mahindra & Mahindra

Mahindra & Mahindra was established in 1945 and is a key player in the Mahindra Group. The company specializes in manufacturing sport utility vehicles, trucks, and farm tractors. Mahindra & Mahindra is recognized as the world’s leading tractor manufacturer by volume and a significant contributor to the automotive sector in India. The company has expanded its operations to over 100 countries and has a workforce of more than 260,000 employees.

Market Share in FY24

20.4% market share of total SUV revenue 

49% market share in less than 3.5T light commercial vehicles.

41.6% market share in Farm Equipment

58.7% market share in eclectic three-wheeler vehicles

Segment Analysis Of Mahindra and Mahindra

Mahindra and Mahindra have diversified their product portfolio into tractors and automotive vehicles, which include passenger vehicles, commercial vehicles, three-wheelers, and automotive exports. The company has 47 manufacturing plants across India. The table shows the units sold by Mahindra and Mahindra in FY24.

Financial Analysis Of Tata Motors Vs Mahindra & Mahindra

Revenue and Net Profit

Coming into the financial analysis of Tata Motors and Mahindra & Mahindra, the revenue of both companies has increased over the last five years. Tata Motors Limited’s revenue has increased from ₹261,068 crore in FY20 to ₹437,928 crore in FY24, which has grown at a CAGR of 13.81% over the last four years.

In FY24, Tata Motors Limited’s revenue grew by 26.58%, from ₹345,967 crore to ₹437,928 crore as compared to the previous year. The revenue mainly comes from India by 29.17%, North America by 15.41%, China by 13.06%, Europe by 12.68%, the UK by 12.56%, and other countries by 17.12%.

Mahindra and Mahindra Limited’s revenue has increased from ₹75,382 in FY20 to ₹139,078 crore in FY24, which has grown at a CAGR of 16.55% over the last four years. In FY24, Mahindra and Mahindra Limited’s revenue has grown by 14.6%, from ₹121,362 crore to ₹139,078 crore as compared to the previous year. The revenue mainly comes from India by 88.56% and other countries by 11.44% in FY24.

Tata Motors Limited’s net loss has turned into net profit. The company has shifted its net loss from -₹11,975 crore in FY20 to ₹31,807 crore in FY24. Notably, the net profit of Tata Motors Limited has grown by 1082.42%, from ₹2,690 crore in FY23 to ₹31,807 crore in FY24.

Mahindra and Mahindra Limited also diverted its net loss into net profit in the year 2021. The company’s net profit has grown from ₹1,512 crore in FY21 to ₹12,270 crore in FY24, which has grown at a CAGR of 100.95% over the last 3 years. In FY24, the net profit of the company has grown by 7.88%, from ₹11,374 crore in FY23 to ₹12,270 crore in FY24.

Profitability Ratios

Tata Motors Limited’s negative operating profit margin has shifted into a positive operating profit margin. In FY24, the company’s OPM increased from 3.37% in FY23 to 8.72% in FY24. The NPM of Tata Motors also grew from 0.68% in FY23 to 7.10% in FY24. The average five years of OPM and NPM of Tata Motors have been 4.20% and -1.23%, respectively.

Mahindra and Mahindra Limited’s average operating profit margin for the last five years will be 14.67%. In FY24, the company has improved its OPM margin from 14.12% in FY23 to 16.15% in FY24. Mahindra and Mahindra Limited’s net profit margin has slightly decreased from 8.13% in FY23 to 8.06% in FY24. The average NPM of the last five years of M&M Limited has to be 4.14%. 

Return Ratios

Tata Motor’s return on equity has massively improved from 5.32% in FY23 to 36.97% in FY24. In M&M, ROE has decreased from 18.24% to 17.02% in FY24. In contrast, Tata Motors has a better ROE compared to Mahindra and Mahindra in FY24. The average ROE of Tata Motor and M&M has to be -5.37% and 10.77%, respectively.

Tata Motors Limited’s ROCE has tripled from 6.45% in FY23 to 19.39% in FY24. It has an average ROCE of 6.67% in the last 5 years. The ROCE of M&M has increased from 12.66% in FY23 to 13.89% in FY24. In comparison, Tata Motors has a better ROCE compared to Mahindra and Mahindra in FY24. In the average ROCE of the last five years, Mahindra and Mahindra have been better compared to Tata Motors.

Debt Analysis

Tata Motors has declined its debt-to-equity ratio from 2.77x in FY23  to 1.16x in FY24. Mahindra and Mahindra Limited has slightly reduced its debt-to-equity ratio, which is from 1.57x in FY23 to 1.56x in FY24. In comparison, Tata Motors is better than Mahindra and Mahindra Limited in FY24.

Tata Motors Limited interest coverage ratio has improved from 3.57x in FY23 to 6.56x in FY24. M&M’s interest coverage ratio decreased from 3.69x in FY23 to 3.61x in FY24. In contrast, Tata Motors has a better interest coverage ratio compared to Mahindra and Mahindra Limited in FY24.

Also read…

Future Plans Of Tata Motors vs Mahindra & Mahindra

Tata Motors

Tata Motors is working to expand its electric vehicle (EV) portfolio, with plans to launch new EV models like the Curvv EV and increase the penetration of EVs across various price points.

Tata Motors is undergoing a demerger of its Commercial Vehicle (CV) business and Passenger Vehicle (PV) business. The CV business will be separated into a new listed company (TML), and the PV business will be merged into the existing Tata Motors Passenger Vehicles Limited. 

The company is pushing into electric commercial vehicles, with plans to increase the deployment of electric buses and trucks. They have already deployed over 2,900 electric buses.

Tata Motors has announced a partnership through its JLR brand to create new electric vehicles under the Freelander brand in collaboration with Chery. This initiative is expected to target the Chinese market with potential global expansion.

Tata Motors has announced a planned capital expenditure of approximately ₹8,000 crore for the fiscal year 2025. This investment will focus on research and development as well as digital initiatives within both its commercial vehicle (CV) and passenger vehicle (PV) sectors.

The company is enhancing its digital services like “Fleet Edge,” a platform for managing vehicle performance and fuel efficiency and expanding online retail platforms for vehicles and spare parts. 

Mahindra and Mahindra

Mahindra & Mahindra has two EV subsidiaries, MEAL (Electric SUV) and Last Mile Mobility (LMM). MEAL is valued at $9 billion and plans to launch products by 2027.

The company allocated ₹5000 crore as capex for its farm business over a three-year cycle. This will help to improve the tractor segment operations.

Mahindra aims to strengthen its international presence, especially in South Africa, Australia, and New Zealand, leveraging products like the XUV700 and Scorpio.

Mahindra plans to introduce the Thar Five Door to tap into wider market segments. This product is aimed at a more family-oriented market.

Mahindra & Mahindra has plans to make their farm machinery business profitable within the next two years, with a significant focus on the operational leverage of these segments.

Key Financial Metrics Of Tata Motors Vs Mahindra & Mahindra

Target Price

Tata Motors

Emkay Global has given a target price of Rs. 1175 to Tata Motors. According to Emkay, the Tata Motors stock price has corrected 16% from its peak and amid an outlook downgrade at peer BMW.

KRChoksey has announced the target price of Tata Motors will be Rs. 1156. In Q1 FY25, the company’s revenue stood at INR 1,08,048 crore, which grew by 5.7% YoY. The main factor contributing to the YoY revenue growth was the 2.6% YoY increase in volume, which reached 327,646 units.

UBS global brokerage has issued a sell recommendation for Tata Motors. UBS raises concerns about Jaguar Land Rover’s (JLR) diminishing order backlog, which has dropped below levels seen prior to the COVID-19 pandemic, and increasing markdowns on high-end models like the Range Rover, which may have an additional negative effect on profitability.

ICICI Direct has given a buy on Tata Motors and declared a target price of Rs. 1200. According to ICICI, the company has gradually increased its share in the CV segment and is planning to improve volume growth in PV segments, which will help to increase the market share by 16% in 2027 and 18-20% in another 2-3 years.

Mahindra and Mahindra

ICICI Securities Limited has given a target price of Mahindra & Mahindra will be Rs. 3349. According to Securities, Mahindra & Mahindra’s (M&M) EBITDA margin was up to 14.9%, which was up by 200 bps QoQ. The auto and FES segment’s EBIT margin was up 70bps/270bps QoQ at 9.5%/18.5%.

Sharekhan has announced the target price of Mahindra & Mahindra will be Rs. 3431. Sharekhan says that M&M demonstrated strong operating performance in Q1 FY25, driven by significant gross margin expansion. However, the company’s bottom line fell short of expectations due to lower-than-anticipated other income.

Motilal Oswal declared a target price of Rs. 3300. Oswal states that Mahindra & Mahindra‘s (MM) FY24 annual report highlights the company’s strategic focus on moving to “deliver scale” across all of its businesses, which are divided into three categories.

Conclusion

In conclusion, Tata Motors and Mahindra & Mahindra lead India’s automotive sector with different strengths. Tata Motors dominates electric vehicles and commercial vehicles. Mahindra excels in SUVs and farm equipment.  Both companies show strong financial growth.

Tata Motors improved its profits significantly in FY24. Mahindra maintains steady growth in revenue and market share. Tata Motors attracts attention for its JLR division and EV leadership. Mahindra has gained recognition for its SUV innovation and farm equipment dominance. Investors view both companies positively. Both companies are heavily investing in electric vehicle development, positioning themselves for future market demands. 

Which company’s future growth strategy do you think is more promising, Tata Motors or Mahindra & Mahindra? How do you see electric vehicles shaping the competition between Tata Motors and Mahindra? Between Tata Motors and Mahindra, which stock would you invest in and why? Let us know in the comments below.

Written By Nikhil Naik

By utilizing the stock screener, stock heatmap, portfolio backtesting, and stock compare tool on the Trade Brains portal, investors gain access to comprehensive tools that enable them to identify the best stocks, also get updated with stock market news, and make well-informed investments.

The post Tata motors vs Mahindra & Mahindra – Who will win the automobile war? appeared first on Trade Brains.

In India, vehicles are essential for daily life. Tractors help farmers transport their goods to markets, while cars allow families to travel easily. Together, they connect rural and urban areas, supporting both agriculture and city living. Tata Motors and Mahindra & Mahindra stand at the forefront of this automotive evolution. Their rivalry reflects broader trends
The post Tata motors vs Mahindra & Mahindra – Who will win the automobile war? appeared first on Trade Brains.   Read MoreCase Study, Financials, Stocks, Mahindra future plans, Mahindra share price, stock market, tata motors, tata motors future plans, tata motors share price, Tata Motors vs Mahindra share Trade Brains