- 20 Jun 2024
- ICICI Securities
TATA MOTORS ANNOUNCED PRICE HIKE IN CV DOMAIN, INCREASES CAPEX SPEND OUTLOOK AT JLR
TATAMOTORS - 655 Change: -13.10 (-1.96 %)News: Tata Motors in a regulatory filing has informed exchanges that it will undertake price increase of up to 2% across its commercial vehicle space with effect from 1st July 2024. The price increase is to offset the impact of rising commodity prices. It will be applicable across the entire range of commercial vehicles, and will vary as per individual model and variant. In a separate development, Tata Motors overseas luxury PV player i.e. JLR at its annual analyst meet has raised its capex spend guidance from 15 billion pounds to 18 billion pounds over FY24-28 (5-year block).
Views: With clear cut ambition of sustaining healthy double-digit EBITDA margin profile (10.8% in FY24) amid steady volume prints, the given price hike will support company’s margins in the near term and is positive in nature. Given the company’s leadership in the CV space with ~40% market share, we expect other industry players to also announce corresponding price hikes. On the JLR front, the capex guidance for FY25E was already pegged at 3.5 billion pounds with further pent up expected in coming years. We don’t see any challenge funding its increased capex spend and is a neutral development for the company.
Impact: Positive