Tata Motors the Hidden Gem
Tata motors, the blue-chip stock was in a phase of underperformance for almost a decade. But the stock is now in a verge to unlock the true value and about to outperform the whole index. Let’s analyze the auto giant in detail to have a better understanding about the stock and identify the investment opportunity.
Tata Motors Limited is a leading global automobile manufacturer in India with a diverse product portfolio that includes passenger vehicles, commercial vehicles, and electric vehicles. Tata motors ltd is the parent company of the luxury segment automotive giant Jaguar and land Rover (JLR). The company has a market capitalization of 1.68 trillion. The company has a strong presence in India and international markets, including the United States, Europe, China, and other regions.
Tata Motors Performance
Tata Motors, a subsidiary of the Tata Group, has a long history in the Indian automotive industry. However, in the past decade the company has faced various challenges in recent years. Stock price were kept falling and underperforming for several years. Tata Motors has hit an all-time high of 605.90 in the year 2015 and is still underperforming till the date. The stock is trading at 469.50 as of 19th April 2023. The stock is down 22% from the 2015 high as on the last traded price of 469.50 on 19th April 2023.
To get more understanding, if you have invested one lakh rupees on Tata motors in the year 2015. The current invested value will be around 78000 Rs only. There were several factors that affected the performance of the company and the stock price including declining sales, increased competition, changing consumer preferences, and financial losses. Nevertheless, Tata Motors has taken several strategic measures to stage a comeback and regain its position as the second bestselling passenger vehicle company in the Indian market.
INTERESTING FACT – REVENUE OF TATA MOTORS COMPANY IS MORE THAN THE WHOLE REVENUE OF THE PEER INDIAN AUTO COMPANIES COMBINED
WHY TATA MOTORS IS A HIDDEN MULTIBAGGER
As mentioned earlier Tata Motors has been underperforming for a decade. But now its time for Tata motors to unlock its true value and can deliver multi bagger returns to investors. Lets understand the prominent factors why Tata motors stock price can break highs and higher highs.
Tata Technologies IPO
Tata Motors can potentially benefit from Tata Technologies’ IPO in multiple ways .Tata technologies IPO helps Tata motors to achieve the target of getting zero debt company by 2024 . This Initial public offering can positively impact Tata Motors’ financial position and enhance its ability to pursue growth strategies.
- Financial gains
Through the IPO, Tata Technologies is expected to raise capital by selling shares to the public, which will likely result in an infusion of funds for Tata Motors. The proceeds from the IPO can be utilized by Tata Motors for various purposes, such as reducing debt, funding research and development, expanding operations, or investing in new business opportunities. A successful IPO can create positive impact on the stock and the parent company which helps the tata motors ltd stock to gain and make a turnaround in 2023.
- Enhanced valuation for tata motors
A successful Initial public offering of Tata Technologies can make a positive market response which can lead to an increase in Tata Technologies’ valuation. Positive impact on Tata motors valuation can result in higher market capitalization for Tata Motors, potentially leading to increased investor confidence, improved credit ratings, and better access to capital markets.
- Helps to unlock the shareholder value
With the Initial public offering, Tata Technologies can provide an avenue for Tata Motors to monetize its investment in the subsidiary. Tata Technologies’ IPO can potentially provide a great exit on investment for Tata Motors. This can enhance the overall financial performance of Tata Motors and boost investor confidence
Improvement In Jaguar Land Rover Business
Tata Motors Limited, an Indian multinational automotive company, acquired Jaguar Land Rover (JLR), a British luxury car manufacturer, in 2008. The acquisition of JLR has had a significant impact on Tata Motors’ business, both positive and negative. The JLR business was in a struggling phase for years being a loss-making subsidiary for the parent company . But JLR is now in a recovery stage with clocking huge demand for the luxury segment vehicles. Let’s look how Improvement in JLR business can help Tata motors become profitable business in the coming quarters as well.
JLR has contributed more than Fifty percent of Tata Motors’ revenue and profitability. JLR has a strong product portfolio of luxury vehicles, including popular brands such as Jaguar and Land Rover, which have generated substantial sales and profits for Tata Motors. Improvement in JLR business can make a huge impact on the profitability and debt reduction of tata motors. JLR’s premium positioning has allowed Tata Motors to command higher margins and increase its overall profitability. In addition, JLR’s advanced technologies and engineering capabilities have been leveraged by Tata Motors to enhance its own product offerings.
Rubusting Electric Vehicle Ecosystem
The business conglomerate Tata group with the mastermind has created an EV ecosystem in India. Tata group has created an eco-system which has Tata Chemicals Ltd for battery manufacturing, Tata Steel Ltd for vehicle manufacturing, Tata Power Ltd for providing charging facilities, Tata Elxsi Ltd for Artificial intelligence service and Tata technologies Ltd for Auto components.
Tata Motors Limited, an Indian multinational automotive company, has emerged as a leader in the electric vehicle (EV) segment, both globally and domestically. With the TATA EV ecosystem Tata motors Ltd is whooping the EV sales in India by providing the best quality Electric vehicle at a lower segment that cannot be offered by the peer companies. Tata Motors has developed a product portfolio of electric vehicles, ranging from passenger cars to commercial vehicles. The Tata Nexon EV, launched in early 2020, has become India’s best-selling electric SUV, with strong demand from consumers. Tata motors has also launched various electric vehicles in both passenger vehicles and commercial vehicles. The subsidiary company Jaguar Land rover business is also aiming for making a electric vehicle portfolio by 2025.
Tata Motors has received strong support from the Indian government in its EV endeavour. The Indian government has implemented various policies and incentives to promote electric mobility. This includes tax benefits, subsidies, and charging infrastructure development. Tata motors have received global investment for its EV business, which provides the company a boost to maintain its leadership in EV business. Also aims to introduce more vehicles aggressively in both global market and Indian market. Tata Motors’ leadership in the EV segment is expected to continue to grow, driven by its focus on innovation, sustainability, and customer-centric approach. As the global automotive industry shifts towards electric mobility, Tata Motors is well-positioned to lead the way in the EV segment with its innovative products and solutions.
BREAK DOWN OF TATA MOTORS REVENUE
Best price levels at which Tata Motors can be added to your portfolio
Tata motors has been trading in a Range of 360 -538 for almost two years. The best price levels we can consider adding to our portfolio is below 400. Tata motors is trading at a price of 469.50 as of 19th April 2023. 450 can be considered as an immediate support for Tata Motors stock. 480 can act as an important resistance. Breaking this range can enable good buying momentum in the stock and can breach higher levels.
Always do your own research and analysis before adding a stock to your portfolio. Investing in Exchange traded Funds (ETF’s) can be considered as it provides good returns and less risks compared to stocks .