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TATA MOTORS
(Rating: Buy; CMP: Rs. 730; Target: Rs. 1020; Upside: 39.7%; Investment Period: 6-12 months)
Investment Rationale
• Tata Motors fell sharply due to reemerged European debt concerns a month ago leading to worries for
premium car demand. With the sharp correction of ~25%, its valuations are approaching to its lows of FY09 on
EV/Sales and P/BV. Given the current price, we believe the market seems to be factoring in an overly
pessimistic scenario- standalone business (lacklustre volume + lower margin) and JLR (flat volume +
significant margin erosion).
• With both the parent and JLR expanding products into mass segments, we expect the capex and R&D
investments to extend the improvement in ROE in the coming years.
At CMP of Rs 730, the stock is trading at P/E (Cons) of 4.89 on TTM basis. EPS (Cons) on TTM basis is Rs 142.9.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
TATA MOTORS
(Rating: Buy; CMP: Rs. 730; Target: Rs. 1020; Upside: 39.7%; Investment Period: 6-12 months)
Investment Rationale
• Tata Motors fell sharply due to reemerged European debt concerns a month ago leading to worries for
premium car demand. With the sharp correction of ~25%, its valuations are approaching to its lows of FY09 on
EV/Sales and P/BV. Given the current price, we believe the market seems to be factoring in an overly
pessimistic scenario- standalone business (lacklustre volume + lower margin) and JLR (flat volume +
significant margin erosion).
• With both the parent and JLR expanding products into mass segments, we expect the capex and R&D
investments to extend the improvement in ROE in the coming years.
At CMP of Rs 730, the stock is trading at P/E (Cons) of 4.89 on TTM basis. EPS (Cons) on TTM basis is Rs 142.9.
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