About Tata Motors
Stock Price: Rs. 330
Tata Motors operates in 2 business segments – Automotive Operations and Others
 Automotive operations accounted for 98.95% of the total revenues in Q3 FY 2018. The Company’s automotive operations segment is further divided into Tata and other brand vehicles (including vehicle financing) and Jaguar Land Rover.
Jaguar Land Rover contributed 76% in Q3 FY 2018 (79% in FY 2017) of the Company’s total automotive revenue and only the remaining 24% in Q3 FY 2018 (21% in FY 2017) came from Tata and other brand vehicles.
 Others – The other operations business segment includes information technology, machine tools and factory automation solutions.
Clearly, Tata Motors stock price is largely being driven by JLR sales and company’s Indian operations have been a drain on its financials.
WHAT’S DRIVING THE STOCK
Growth in Domestic Business
In February 2018, the Company registered a growth of 38% at 58,993 units as against 42,679 units due to the continued strong sales performance of its Commercial and Passenger Vehicles Business in the domestic market.
The Company has also reported net profit of Rs. 182 Cr. in Q3 FY 2018. The Company’s standalone business had been loss-making for four consecutive years.
Gaining Market Share in both Commercial and Passenger Vehicles
The Company is on track to regain market share in both commercial and passenger vehicles. In the commercial vehicle market, demand for higher tonnage vehicles, increased government funding & growth in e-commerce has helped. For the passenger vehicle segment, some of the product launches like Nexon, Tiago, Tigor and Hexa have been received well by customers.
Government Push To Electric Vehicles (EV)
The government’s push towards electric vehicle will also prove to be positive for the Company. According to SIAM, electric vehicles will constitute 40% for overall new car sales by 2030. On 8th March, 2018, Energy Efficiency Service Ltd (ESSL) has floated another tender for 10,000 electric cars.
Earlier in December 2017, Tata Motors has successfully supplied its first batch of Tigor EV to ESSL, as part of the tender for 10,000 electric vehicles floated by the government in September.
Also in Auto Expo 2018, Tata Motors unveiled its range of six electric vehicles across personal as well as mass mobility categories.
WHAT’S DRAGGING THE STOCK
Over the past one year, Tata Motors has fallen over 26% (from Rs. 467.60 to Rs. 345.15), on the other hand its competitor, Ashok Leyland in the medium & heavy commercial vehicles (M&HCV) has surged 59% (from Rs. 90.45 to Rs. 144.15) and Maruti Suzuki, its biggest competitor in passenger vehicle segment has rallied 46% (from Rs. 5964.40 to Rs. 8729.35).
WHY IS TATA MOTORS STOCK PRICE FALLING – the reason should really be Jaguar Land Rover (JLR) Motors.
The Company’s JLR business is facing multiple headwinds. In Q3 FY 2018, JLR’s volume sales declined in key western markets — the UK, US and Europe — and rose in China and the rest of the world.
Part of the weakness could be blamed on the phasing out 17 models of Range Rover and Range Rover Sport. However, new variants of these models will return this year. The greater concern is increasing restrictions on diesel vehicles in Europe (the company’s European and UK portfolio being predominantly diesel).
JLR is poised for a sharp recovery, driven by its promising product line like Range Rover Velar, Land Rover Discovery, Jaguar F-PACE, I-Pace and RR/RR Sport refresh. However the Company’s management indicated that weak market conditions in UK will constrain performance.
Thanks for this incisive analysis.
Should I buy Tata Motors or Tata Motors DVR shares?
I’ll buy the Tata Motors DVR then.
Thanks for the analysis. Given that JLR forms more than 70% of sales and almost all of the profits, just curious as to whether the multiples comparison with say a BMW be more appropriate? If so, in which case the valuations are justified.
Thanks in advance for your feedback.
I have tata motors 357 share at 320 price ,what can we do buy or sell or hold
I have tata motors DVR 515 share @ 180 Rs sell hold or buy ??