A STUDY ON PROFITABILITY RATIOS ANALYSIS AT TATA MOTORS

Abstract

Profitability ratio analysis is a cornerstone tool of financial statement analysis, enabling stakeholders to assess a firm’s capacity to generate earnings relative to revenue, assets, equity, and capital employed. This study conducts a comprehensive profitability ratio analysis at Tata Motors Limited, India’s largest automobile manufacturer by revenue, over the five financial years FY 2019–20 to FY 2023–24. The analysis employs secondary data drawn from Tata Motors’ annual reports, examining Gross Profit Margin, Net Profit Margin, Operating Profit Margin, Return on Assets (ROA), Return on Equity (ROE), Return on Capital Employed (ROCE), and Earnings Per Share (EPS). The study also evaluates trend patterns and inter-year variability in profitability, linking financial performance to key strategic and macroeconomic events including the COVID-19 disruption, Jaguar Land Rover (JLR) performance cycles, semiconductor supply chain disruptions, and post-2022 recovery momentum. Findings reveal significant profitability volatility driven by JLR’s global exposure and domestic commercial vehicle (CV) cycles, with FY 2023–24 marking a strong profitability recovery. The study provides actionable recommendations for sustaining improved profitability through cost discipline, product mix optimisation, and EV transition financing strategies.