Tata Motors to Invest Rs 43,000 Crore in Products and Technologies in FY25
Tata Motors, the Mumbai-based auto major, plans to invest Rs 43,000 crore in products and technologies in the upcoming financial year 2024-25. This represents a slight increase from the Rs 41,200 crore invested in FY24.
The majority of the investment, around Rs 35,000 crore, is expected to be directed towards the British arm, Jaguar Land Rover (JLR). In FY24, JLR received around Rs 33,000 crore, while Tata Motors received around Rs 8,000 crore.
PB Balaji, Group CFO of Tata Motors, explained that JLR investments would increase by approximately 6% in FY25, while Tata Motors investments would remain flat. This increase in JLR investments is attributed to the company's upcoming product launches, including the Range Rover BEV and the Defender Octa.
Analysts from Sharekhan predict that JLR's capex will reach £3.5 billion in FY25. They also anticipate that JLR will become net debt-free in FY25, despite the planned capex of £3.3 billion. This is due to the reversal of working capital benefits, which could potentially lead to JLR achieving free cash flow breakeven in Q1FY25.
JLR's net debt has already reduced significantly, from £1.57 billion in the October-December quarter to £732 million. Additionally, the Indian auto operations are now net debt-free, with expectations for consolidated (auto) level net debt to reach the same status in FY25.
Analysts from Motilal Oswal expect JLR margins to remain stable over FY24-26. However, they anticipate rising cost pressures due to investments in demand generation, normalizing mix, and EV ramp-up, which could potentially dilute margins.
Meanwhile, the India PV business is expected to see a boost with upcoming launches like Curvv (SUV) later this year and Sierra next year.