Tata Motors Limited (ADR) (TTM)

Tata is a long term company, buying up the more luxurious arms of the already "too big" automotive companies, they are taking all of the technology that these bigger companies made. Tata has taken great advantage and is finding its time to become big in the market.

The only thing keeping this stock from taking off right now is all the automotive giants playing "Johnny-Come-Lately" to all of Tata's ideas and markets. Tata keeps punching out the growth, even competing against the big dogs though. Good leadership with big eyes. Good bet

Tata has developed a car, named Tata Nano, that aims to sell in 2008. It is the least expensive production car in the world: the price is about Rs 100 000 (USD $2,500). Tata has faced controversy over developing the Nano. Some environmentalists are concerned that the launch of such a low-price car could lead to mass motorization in India with adverse effects on pollution and global warming. Environmentalists concerns, as well as the recent and expensive purchase of Jaguar and Land Rover brands, have put immense downward pressure on the stock. In my opinion, the environmentalists' claim is unfounded, as the engine underneath the hood is made by Germany's Bosch. The engine will be light on fuel consumption and low on emissions, and in time the world will take notice. Jaguar and Land Rover will play to the upscale car market of this country with British imperialistic ties.

An auto maker with its finger on the pulse of one of the world's fastest growing markets. The potential for a JV with the slimmed-down and more focused Fiat is a plus.

Tata is a quality name in India - the top industrial company. Tata Motors is a long term bet on the Indian economy and growth of the middle class. TTM also is very ambitious, and wants to become dominant in emerging markets, with plans to build a $2.5k car. Success in creating a profitable low cost car could give them a lock in a lot of emerging markets in Asia, Eastern Europe, and other markets. This is a company with a lot of promise, trading right now at the bottom of its range.

Picking this stock up again b/c... well frankly I should have never stopped my pick in the first place. That being said, it is only a few cents higher than when I last picked this company to outperform. In addition, now that the Nano is out there and not just a "could be" prospect, I forsee great things with this company. Here is my original pitch:

Ford made it in the early days b/c it built the first affordable car (not the first car) for the common working man in a country where the size of the "common working man class" was growing rapidly and in an economy that was growing solidly. Hmmm, if I could only go back in a time machine and invest back then in that situation...

I think Tata is really just now startging to get some real investment exposure, which could easly knock the stock price up due to a multiples expansion. In the meanwhile, the stock pays a nice little dividend @ 2.2% to pay for daily investor expenses.

By the way, Tata, the Tata group which I assume owns a large chunk of this company is pretty huge and succesful... kind of like the GE of India, so great management support (i.e., not a bunch of guys in the garage creating and supporting this co.).

To answer this question one must successfully forcast Indian politics. TATA will outperform in the short term only because it is a protected industry in a rapidly growing economy.

It can't compete on quality with Japanese or Korean automakers which make very small vehicles (that we do not see in North America). My mother rides a $2500 3-wheeled mobility scooter made in China. TATA is not going to develop a $2500 car -a tricycle with a lawnmower engine perhaps but not a car. A very cheap car would be a very unsafe one. It would not be tolerated in India.

The most likely source of "cheap" cars for India would be used Japanese cars (both drive on the left). Will India open its doors to competition? It will if it wants to export Rovers and Jaguars.

I love screaming value, especially for a company with great growth potential. Let's start with industry rankings. They rank 6 out of 8 for market cap (6.8 Billion), which allows plenty of room for total growth. Growth rankings for revenue and earnings are tops in the industry. That will translate to a higher position in the market cap ranking, which translates to increased returns from the current picture.

We can state the obvious and conclude that a PEG of .68 is cheap. You have to ask why, this is a company that operates in a high growth economy, pays a dividend, and is not diluting there outstanding stock. They have a large some of LT debt on their books which translates to a high interest expense. As I took a close look I noticed 06 was the first year they also had investment income. There LT Investments are actually about 40% higher than their LT Debt. The interest earned from this in 06 allowed them to increase their capital expenditures from the previous year while operating cash flow had decreased from 500 million to 100 million. This cash flow strategy reminds me a bit of middleby (ok I wont go that far).... Their ROE was manually calculated around 18% and their current ratio at 1.11.

I wish I knew more about the operations and internal goals of management. On paper they are doing the right things, buying back moderate amounts of shares, declaring appropriate sized dividends, increasing capital expenditures, suprising earnings estimates constantly etc. 5 year growth is estimated at 20%, I am not sure what this is based off. Future growth looks great and management seems to be reinvesting capital to continue the growth.

Their balance sheet makes me a little hesitate about how they would handle a heavy bear market. The good thing is the current discount on their share price gives a nice margin of safety (percentage anyone?).

One thing concerns me - YOY for 06 Receivables doubled, while Revenue grew 61%. This is a little unfavorable. I would like to know the history of collectability for Tata's receivables. I would also like to know if they are vertically integrated the way companies like Honda are. Do they have a financing department that earnes additional interest revenue from their increased receivables?

Bottom line this stock is undervalued with a high margin of safety and huge growth prospects. If the stock continues to beat estimates it will have no where to go but up. Everyone is worried about larger automakers coming in and taking their market share. This is speculation not valuation.

Tata Motors is one of the world's strongest companies and a wise investor would load up on shares under $20 as this will be a $50+ stock within three years. There are simply few international companies with the economic, demographic, and industrial backbone of Tata.

The middle income group in India has nowhere to go but grow. This car manufacturer may be an order of magnitude smaller than Ford or GM - but they would kill for Tata's margins. Forward P/E around 13, yoy growth at 75%, 35% insider ownership. India may not be as car friendly as the U.S. but that won't stop sales.

The dominant company in the Indian automotive market. One of the few developing world companies that does its own (excellent) R&D in this sector. They've made good decisions in the past regarding where to focus their energies, and I don't see any reason why management will not continue to excel.

I've spent several yrs in India and am very familiar with the TATA group and TATA MOTORS. They make excellent products that are very fairly priced. The company has integrity that is rare in today's greedy world. I am confident this is a top pick.

TTM owns a large chunk of a huge growth industry. Indian demand for commercial vehicles is going nowhere but up, and that alone would be enough to recommend the stock. The interesting upside story is TTM's play to win the lower-end consumer market with a $2500 car.

When I asked my Indian colleagues about Tata, I got nothing but positive responses across the board.

That you can buy such an interesting growth story at a lower PE ratio than Toyota makes no sense at all.

Lots of upside potential, but relatively high risk. TTM will have to integrate Jaguar's/Land Rover's into their business will retaining the image and culture that defines these brands. The company is taking on additional debt to finance this purchase. Overall, I think TTM will become a global conglomerate force, like Toyota. I am in this for the long run and believe that this should eventually pay out. However, there is a lot of short-term downside to this stock as well.

Want to talk about a "growth" industry? Indian and Chinese cars on the road combined are supposed to rise to 1.2 billion by 2050 from 20 million today. Now let's count that into the valuation of TTM, India's largest auto manufacturer...

And we get..
One huge winner.

The $2,000 car -- enough said! Tata Motors, part of a huge Indian conglomerate and India's largest automaker, is positioning itself as the vehicle-provider for Asia's vast emerging middle class.

i have seen the influence of TTM in india and its growing popularity. They are known for their economical cars and the masses of india can afford this. I great way to tap in the growing indian economy.

http://www.youtube.com/watch?v=7UCwUqterV4
The new TATA Nano is great just great - I love it the People's Car.

An outperform for India's TATA motors is like an outperform for a sure up and coming underdog, not just a pick for one emerging country, but a company for all emerging countries. TATA motors is India's most recognized industrial company with interest in vehicles, engines, marine applications, information technology services and construction. They've experienced decades of growth and are sure to profit through the next few decades as not just India's up and coming middle class arrives, but the middle class of much of Asia arrives.

Every now and then I'll take a pick from Mr. Cramer, of course after doing my own research. I'm long on this stock and think it has huge upside potential especially right now trading at approx 16 times earnings. (I am also long on ford, but that is because of the timing of the purchase more than the business itself).
forward P/E is around 14X, and on top of all that, the stock pays a dividend. India and China are becoming huge markets as the countries begin to develop economically. TTM is one of the only (or few) plays in the Indian auto market, plus they are domestic to the Indian market. In my opinion the stock has been beaten down by the over valuation fears of the "China / India bubble" that hit the market in February but now is a great buying time!!