Tata Motors Q1 results: plans to convert DVR shares into ordinary shares

Tata Motors released its financial results for the first quarter of FY24 today. During Q1 FY24, the company experienced a significant boost in revenue from operations, witnessing a YoY increase of 42.5%, rising from Rs 71,227.76 Crore to Rs 101,528.49 Crore. When compared sequentially, the company’s revenue showed a decline of 3.32%, going from Rs 105,016.70 Crore to Rs 101,528.49 Crore.

Analysing the revenue segments, revenue from Jaguar and Land Rover surged by 65.81% YoY, increasing from Rs 43,056.30 Crore to Rs 71,395.54 Crore. Sequentially, this revenue remained nearly flat, decreasing slightly from Rs 71,463.07 Crore to Rs 71,395.54 Crore.

Furthermore, commercial vehicle revenue experienced a 4.4% YoY growth, going from Rs 16,269.81 Crore to Rs 16,991.25 Crore, while witnessing a decline on a month-on-month basis, from Rs 21,239.90 Crore to Rs 16,991.25 Crore.

Regarding passenger vehicle revenue, it grew by 11% YoY, from Rs 11,556.32 Crore to Rs 12,839.03 Crore. On a sequential basis, it saw a growth of 6.16%, increasing from Rs 12,093.12 Crore to Rs 12,839.03 Crore.

In terms of Earnings before interest and taxes (EBIT), Tata Motors reported a positive EBIT of Rs 8,259 Crore in Q1 FY24, compared to a negative EBIT of Rs 498 Crore in the same quarter last year, achieving an EBIT margin of 16.7%.

The net profit for the June quarter amounted to Rs 3,089.70 Crore, a significant improvement from the net loss of Rs 4,950.97 Crore in the same quarter last year. The net profit margin turned positive, having been negative in the same quarter of the previous year. However, sequentially, the net profit declined by 43%, going from Rs 5,404.79 Crore to Rs 3,089.70 Crore. The company’s EPS on a sequential basis stood at Rs 8.34, compared to Rs 14.10 per share previously.

Furthermore, the Board of Tata Motors has given its approval for a Scheme of Arrangement, which involves a capital reduction of the ‘A’ Ordinary shares and the issuance of Ordinary shares as part of this reduction.

The Capital Reduction Consideration offers a premium of 23% compared to the price of the ‘A’ Ordinary Shares. As a result of this arrangement, there will be a 4.2% reduction in the total number of outstanding equity shares, leading to increased value for all shareholders.

Moreover, the termination of the ADS (American Depositary Shares) program, in combination with the proposed capital reduction of ‘A’ Ordinary shares, will simplify and consolidate all traded equity securities of Tata Motors. Following these changes, only Ordinary Shares will be listed on both the exchange that is NSE and BSE.

Currently, it has two types of listed equity securities those are Ordinary Shares and ‘A’ Ordinary Shares. The ‘A’ Ordinary Shares carry 1/10th of the voting rights of Ordinary Shares and are entitled to a five percentage points higher dividend.

Moreover, the Board of Directors of TML has approved a Scheme of Arrangement where the ‘A’ Ordinary Shares will be cancelled, and shareholders will receive 7 Ordinary Shares for every 10 ‘A’ Ordinary Shares they hold as consideration for the cancellation.

It is important to note that the successful completion of this transaction is subject to obtaining regulatory approvals and approval from the company’s shareholders.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet, and is subject to changes. Please consult an expert before making related decisions.