Tata Group: The Ultimate Conglomerate Weathering the Global Storm
The history of the market leader that is Tata Group dates back to 1868 which established as a humble trading company and over the decades, it has evolved to become a globally-recognized brand, expanding into many realms including agriculture, automotives, aviation & energy.
Among the conglomerate’s spicy subsidiaries, its two major brands are Tata Consultancy Services, which currently holds the highest market cap of all the brands, and the NYSE-listed Tata Motors, the most famous of all Tata brands, home of the popular Jaguar Land Rover.
Due to its sheer size, Tata Group has seen its fair share of setbacks these past few years. It has flourished in some sectors and miserably lost in others.
How did its major moneymakers perform recently?
Tata Motors — Recent Performance
Tata Motors operates under three segments: Jaguar Land Rover, Tata Commercial Vehicles and Tata Passenger Vehicles. Tata Motors’ collective revenue for the quarter ended September 30th of 2022 was $10 billion; a 20% increase year-over-year (YoY). In a consolidated viewpoint, it has seen sales in the domestic & international market bump by 15% versus last year’s performance.
Tata Motors’ revenue for the twelve months of the same period last year was $35 billion, marking a mere 3% decline YoY. In contrast with annual revenues of this year, it amounted to $36.5 billion, which translates into a 7.5% gain from 2021.
Despite higher revenue, Tata Motors has seen losses in earnings since 2019. Net losses of $4.1 billion in 2019, $1.6 billion in 2020 and $1.8 billion in 2021 were mostly caused by rising operational costs and surging global inflation, and the adverse effects of those were exacerbated by prolonged supply bottlenecks, notably the shortage of semiconductor chips.
Tata Motors — Technical View
As shown in the TradingView chart, the Tata Motors (NYSE: TTM) stock priced at $25 has declined in 2020 by over 20%, currently trading above two sturdy support areas by $23 and $19, and below a resistance level close to $35.
Despite its stumble in 2022 amid macroeconomic turmoil and reluctant investors, the stock looks attractive when putting on the long-term lens. It enjoyed a bullish ride since the start of 2020, recording more than a 500% jump in 2 years.
Tata Consultancy Services — Recent Performance
Focused on IT services consulting and business solutions, Tata Consultancy Services (TCS) is listed on the Indian BSE (Bombay Stock Exchange) & NSE (National Stock Exchange) due to its growing popularity among domestic traders.
The seasoned company which has been partnering with many of the world’s largest businesses in their transformation journeys generated consolidated revenues of $25.7 billion in the most recent fiscal year.
Total revenue in the recent quarter neared $6.8 billion, marking an 18% escalation from the same quarter last year and a miniscule 1.4% bump from the previous quarter. Its net income of $1.27 billion this quarter exceeded last year’s figures by 8.4%, greatly attributed to the company’s strong global market position, characterized by technological leadership in key industry verticals which envisages buoyant industry growth.
Tata Consultancy Services — Technical Analysis
As presented in the TradingView chart, the Tata Consultancy Services (NYSE: TCS) stock priced near $41.5 is trading above a support level by $39 and below two resistance levels close to $43 and $54.
The direction of the TCS stock is looking similar to that of Tata Motors, falling by over 25% in 2020 but was on the rise after that, doubling in price in the subsequent two years.
Future Outlook of Tata Group
According to the executive director of Tata Motors, demand remains strong despite geopolitical and inflation concerns. He stated that “supply situation is gradually improving, whereas commodity inflation is likely to remain at elevated levels.”, and that’s a great indication.
Tata Motors recently ordered a significant number of buses from public transport company Haryana Roadways after Haryana suffered significant losses during COVID, signifying an effort of further expansion & optimistic growth in market share for Tata Motors in the coming years.
Its other major subsidiary, TCS, said it expects margins to improve on a sequential basis after it missed quarterly profit estimates by a wide margin. Employee-related expenses soared despite having had a stellar run in the past couple of years amid companies expanding their digital offerings during the pandemic.
Using these two companies as an indication, and taking into consideration that Tata is expanding to new industries such as beauty technology, its subsidiary brands are ambitiously aiming to acquire more market share in their respective sectors. With Chinese COVID restrictions getting less severe and semiconductor supplies replenishing, Tata Group is set to prosper in the coming months.
