Driving Value: Tata Motors’ Long-Term Shareholder Value Creation Strategy

  Customer Value Customer-centric innovation has always been at the heart of Tata Motors’ strategy. The company recognizes that addressing evolving consumer needs is critical to maintaining relevance and competitive advantage in the automotive market. Tata Motors has been at the forefront of India's electric vehicle (EV) revolution, introducing models like the Nexon EV and Tigor EV. These vehicles are designed to provide sustainable mobility solutions while remaining affordable and high-performing, thus making EV technology accessible to a broad customer base.  Tata Motors also offers a diverse range of vehicles, from compact cars like the Tata Tiago to premium SUVs such as the Tata Harrier, catering to the needs of various market segments. By prioritizing customer satisfaction and delivering innovative, sustainable products, Tata Motors has succeeded in building strong customer loyalty and enhancing brand equity.   Shareholder Value Tata Motors is committed to de...

 

  I. Wacc The primary variation between Bloomberg's WACC and a manually calculated WACC is in the source of data and methodology applied. Bloomberg's WACC uses real-time market conditions for factors such as cost of equity, based on current market beta, interest rates, and volatility, and adjusts for inflation and currency risks as well as market yields for debt and preferred stock. In addition, Bloomberg uses debt and equity market values to ensure that WACC is updated with all the most recent information and forecasts, capital structure adjustments and market trends. WACC calculated manually mainly depends on historical data or assumptions, such as book values for debt and equity or an average based on past beta values. This may make the cost of debt reflect the historical borrowing costs taken from the financial statements, and the risk-free rate may be used as a static value obtained from previous bond yields. Therefore, this does not reflect current market con...

  I. Economic Value Added(EVA) 2023 EVA : INR 1,789.24 crores 2024 EVA: INR 16,537.47 crores Interpretation: Significant EVA Growth: The increase in EVA from INR 1,789.24 crores in 2023 to INR 16,537.47 crores in 2024 indicates a substantial improvement in the company's ability to generate profits above its cost of capital. This suggests enhanced operational performance and potentially improved profitability. Higher NOPAT: The jump in NOPAT from INR 8,633.30 crores in 2023 to INR 24,206.00 crores in 2024 highlights effective cost management and increased earnings after taxes. This improvement in net operating profit demonstrates more substantial core business operations. Efficient Use of Capital: Although the weighted average cost of capital (WACC) has risen slightly from 11.09% in 2023 to 11.61% in 2024, the significant increase in NOPAT more than offsets this. This shows that the company uses capital more efficiently, generating returns well above the capital cost. Balance...