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.BY- VIBHOR GOELSHAHEED SUKHDEV COLLEGE OF BUSINESS STUDIESUNIVERSITY OF DELHIINDIA
HOLT VALUATION CHALLENGE STAGE 2
Greetings to: &
CONTENTS Section 1: Introduction Section 2: Company Analysis Section 3: Peer Comparison/Industry Overview Section 4: Risk Analysis Section 5: Price the stock Section 6: Final Decision
INTRODUCTION Tata Motors Limited (formerly TELCO, short for Tata Engineering and Locomotive Company) is an Indian multinational automotive manufacturing company headquartered in Mumbai, Maharashtra, India and a subsidiary of the Tata Group.
It is the world's 17th-largest motor vehicle manufacturing company, fourth-largest truck manufacturer, and second-largest bus manufacturer by volume.
CEO- Cyrus Pallonji Mistry
1. Introduction
Malaysia*Thailand
Bangladesh *Nepal, Sri Lanka
Kenya*
Russia*Ukraine* U.K.
Italy
Senegal
Afghanistan Uzbekistan
Brazil
South Africa*
Egypt
Saudi Arabia Iraq, Iran
China South Korea*
LATAM
West Africa
North Africa
West Europe
Central Asia
East Asia
South Asia
South East Asia West Asia
East Africa South Africa
OTHER COLLABORATIONS/M&A & JVs• Tata Daewoo Commercial Vehicle• Hispano in Spain & Marcopolo In Brazil• JV with Jardine Matheson for Concorde Motors• Technology Tie Ups at Spain, Italy• British premium car maker Jaguar Land Rover • JV with Hitachi
2. Company Analysis
Information Source: 69th ANNUAL REPORT 2013-14
2.
An Average CFROI Levels of 11% since 2009 and 7.16% since 1993
Asset Growth Strategy in line with the consistent CFROI levels.
A Strong Upward Moment of the stock price since 2002 mainly because of capturing the market efficiently and
product diversification and also discovering new markets overseas.
Few Drop outs seen in CFROI Levels
Acquires JaguarLand Rover fromFord Motor Company
Also because of the launch of Tata Nano and a new range of world standard trucks the next year
Tata Motors plunged into an crisis when the demand for its trucks suddenly collapsed. The company count not show positive figures for PAT in 2001-02 and didn't declare a dividend in that year. Average share prices fell to Rs 90 in 2001-02
Over the next two years, the company shaved around 8 billion rupees from its cost base and nursed itself back to corporate health.
Well Above the market-implied CFROI
3. INDUSTRY OVERVIEW-MAJOR COMPETITORS
3. Peer Comparison
Market Capitalization for TATA Motors is highest in the industry showing the popularity and the scale of Tata motors among its competitors.TATA Motors has the highest Institutional Investors and has a great potential on the Indian market indexes.
Since Mahindra & Mahindra Ltd. Has Second best Market Cap in the market, It is TATA’s biggest Competitor
Which clearly indicates that Tata Motors is ahead of its competitors when it comes to CFROI Levels, Profit Margins.
Section 4: RISK ANAYLSIS Tata Motor’s Interest coverage in the FY 2014 was in par with the median ratio of the industry.
However, it was less in comparison to the peer groups.
Interest Coverage – 5.73
4. Risk Analysis
However, The Credit rating of Tata Motors has been the lowest in the industry mainly due to the low interest coverage ratio.
4.
Tata Motor’s Leverage is 19% higher from the industry’s median.
4.
Section 4: Verdict1. Under all these circumstances, we can conclude that Tata Motors is a pretty
risky stock to invest in when compared to the rest of the players in the automobile industry.
2. However, Its risk is not that great when we see it in a vacuum i.e., when seen Independently.
Risky in the Industry
Not That Risky when seen
independently
4.
Valuation of Stock PricePrice the Stock5.
The HOLT Price has been a continuous reflection of the actual price of the stock from a very long period of time.
CALL
BUY
6. Final Decision
Sources and References 1. HOLT Lens Software 2. www.bseindia.com 3. 69th ANNUAL REPORT 2013-14 4. https://en.wikipedia.org/wiki/Tata_Motors 5. www.tatamotors.com
