49854540 Equity Research Report on Tata Motors

8/4/2019 49854540 Equity Research Report on Tata Motors

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MADE BY:- DIVISHA JHA

MEGHA GOEL

MOTORS


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INDEX Economy and industry analysis

Company analysis Introduction

Acquisition

Rise of Tata motors Financial analysis

Operating profit & net profit

Financial results

Appropriation of profits

Fixed asset, investments and current assets

Ratio analysis

Competitors annalysis

3. Stock analysis

4. SWOT Analysis

5. Recommendation


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Economy and Industry Analysis1/3

CMIE (centre for monitoring Indian Economy) hasestimated GDP to expand at 9.2% in 2011-12 ascompared to the growth of 7.4% in 2009-2010

Automotive industry in India one of the largest& fastest growing globally

Manufactures over 11 million vehicle and exportabout 1.5 million every year.

By 2050, the country is expected to top the worldin car volume with approx 611 million vehicles onnations road


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YEAR TOTAL VEHICLE

PRODUCTION

% CHANGE

2009 2,632,694 11.40

2008 2,332,328 3.35

2007 2,253,999 10.39

2006 2,019,808 19.36

2005 1,628,755 7.22

2004 1,511,157 23.13


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Indian automotive companies HindustanMotors, Mahindra, TATA Motors etc..

Foreign automotive companies in India Maruti Suzuki, Mitsubishi, Nissan MotorsIndia, Hyundai Motors, etc.

Indias automobile export have grown

consistently & reached $ 4.5 billion in 2009 Indias automobile export are expected to

cross $12 billion by 2014


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Introduction to Tata Motors1/2

Multinational corporation, founded in 1945 byJRD Tata

Part of TATA group, formerly known as TELCO

Indias largest automobile company withconsolidated revenues of USD 20.5 billionin2009-10

Dual listed company traded on both theBombay Stock Exchange as well as New YorkStock Exchange


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Key people

chairman

Ratan Tata Carl Peter Forster

vice chairman

Ravi Kant


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Acquisitions1/2 ...

IN 2004, TATA MOTORS acquired Daewoo's

truck manufacturing unit.

IN 2005, TATA MOTORS acquired 21% ofAragonese hispano carrocera giving it

controlling right of the company

IN 2007, formed a joint venture with Marco

polo of Brazil and introduced low floor buses

in the Indian markets


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IN 2008 TATA MOTORS acquired British Jaguar

Land Rover

IN 2010, TATA MOTORS acquired 80% stake inItaly based design and engineering company

Trilix. The acquisition is in line with the

Companys objective to enhance its styling/

design capabilities to global standard.


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Rise of Tata Motors

Tata launched the Indica in 1998, the first fully

indigenous passenger car of India. Though thecar was initially panned by auto-analyst, the

car excellent fuel economy, powerful engine

and aggressive marketing strategy made it one

of the best selling cars in the history of IndianAutomobile Industry. The success of Indica in

many ways marked the rise of Tata Motors


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Profit Analysis

(IN CRORES)

Mar '06 Mar '07 Mar '08 Mar '09 Mar '10

Operating Profit 2,146.36 2,586.51 3,030.52 1,723.10 4,178.28

% change from 2006 -- 20.5% 42% (19.79)% 95%

Net Profit 1,528.88 1,913.46 2,028.92 1,001.26 2,240.08

0

500

1000

1500

2000

2500

3000

3500

4000

4500

2006 2007 2008 2009 2010

operating profit net profit


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A. Financial Results

(In Crores)

items 2009-10 2008-09 % change

1. gross revenue 38364.1 28568.21 34.29%

2. net revenue 35593.05 25629.73 38.87%

3. total expenditure 31414.77 23877.44 31.57%

4. operating profit 4178.28 1752.44 138.43%5. Other income 1853.45 925.97 100.16%

6. EBITDA 6031.73 2678.41 125.20%

7. cash profit 4927.89 2004.73 145.81%

8. profit before tax 2829.54 1013.76 179.11%

9. tax expenses 589.46 12.5 4615.68%

10. profit abter tax 2240.08 1001.26 123.73%

11. balance from previous year 1685.991 383.07 340.13%

12. amount for appropriation 3926.07 2399.621 63.61%


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Appropriation

(In Crores)

Items 2009-10 2008-09

1. debenture redemption reserve 500 267.8

2. general reserve 500 100.13

3. dividend including tax 991.94 345.7

4. balance carried to balancesheet 1934.13 1685.99


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Fixed assets

2009-10 2008-09 Change %

Gross Fixed Assets 23,648.96 20,852.06 2,796.90 13.4

Accumulated Depreciation (7,212.92) (6,259.90) (953.02) 15.2

Total 16,436.04 14,592.16 1,843.88 12.6

Investments increased to Rs.22,336.90 crores as at March 31, 2010 as compared to

Rs.12,968.13 crores as at March 31, 2009 i.e. by 72.24%.

The Company has invested Rs.10,575.60 crores in equity and preference shares of TML

Holdings Ltd, Singapore, which in turn prepaid the bridge loan taken for acquisition of

Jaguar and Land Rover business. Further, TML Holdings Ltd, Singapore has redeemedpreference shares of Rs.877.16 crores. The Company sold part of its investments in Tata

Steel Ltd and 20% stake in Telco Construction Equipment Co. Ltd.


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Current Assets

2009-10 2008-09 Change %

Current Assets, Loans and Advances 11,537.98 9,540.25 1,997.73 20.9

Current Liabilities (14,609.16) (8,597.97) (6,011.19) 69.9

Provisions (2,763.43) (2,078.95) (684.48) 32.9

Net Current Assets (5,834.61) (1,136.67) (4,697.94) 413.3


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RATIO ANALYSIS Mar '08 Mar '09 Mar '10

Investment Valuation Ratios

Face Value 10 10 10

Dividend Per Share 15 6 15

Profitability Ratios

Operating Profit Margin(%) 10.53 6.71 11.74

Net Profit Margin(%) 6.96 3.77 6.26

Return On Capital Employed(%) 18.96 6.41 9.66

Liquidity And Solvency Ratios

Current Ratio 0.64 0.44 0.44

Quick Ratio 0.66 0.58 0.44

Debt Equity Ratio 0.8 1.06 1.11


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Mar '08 Mar '09 Mar '10

Earnings Per Share 52.63 19.48 39.26

Book Value 202.7 240.64 262.3


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Competitors Analysis

Last

Price

Market

Cap.

(Rs. cr.)

Sales

Turnover

(Rs. cr.)

Net Profit

(Rs. cr.)

Total

Assets

(Rs. cr.)

EPS PE Ratio

Tata

Motors 1,073.60 65,606.12 35,593.05 2,240.08 31,591.38 39.26 36.66

Ashok

Leyland49.00 6,518.66 7,244.71 423.68 5,936.76 15.42 3.18

EicherMotors

1,060.85 2,857.69 378.01 37.53 413.30 76.08 13.93

SML Isuzu341.30 493.92 722.23 21.46 274.36 23.13 14.83


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Stock analysis1/3


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Stock analysis2/3


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Stock analysis3/3

Period One Week One Month Three Month Six Month One Year

Period Old Price 1069.05 1190.2 1269.25 893.7 673.25

Price Gain 43.20 -77.95 -157.00 218.55 439.00

Gain in % 4.04 -6.55 -12.37 24.45 65.21


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SWOT ANALYSIS

Strength

One of the leading company in automobile industry with more than70 years of experience. During this period it had produced morethan 3 million vehicles which is huge achievement for the company

It is India largest automobile company with total asset of Rs.31,591.38crores in 2010.

TATA motors is expanding its network in International market byaggressively acquiring foreign companies.

TATA motors has been famous to introduce new vehicles, this ispossible just because of the strong research and development


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Weaknesses

Shareholders of TATA motors are not getting much from their investments due to

low ROI

The thing which customer not like about TATA motors vehicles is weak safety

standards.

Opportunities

As it is low cost vehicle product so it can take the advantage of this strength to

exploit the opportunity by entering into the third world countries.

Incorporate safety features in the vehicles to gain more customer satisfaction

and exploit the opportunity by entering into the third world countries.

Joint venture and acquisition in other countries.


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Threats

The prices of material such as steel, plastic, rubber is rising

which also raise the total production cost of vehicle.

Rising prices of petrol and diesel .

TATA motors has cost advantage over its competitors. If the

competitors will follow the same strategy then it may reduce the

sales of TATA motors.


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Recommendation

Right time to buy the stock of TATA Motors forlong term investor as the company is reallydoing very good in terms of financial result

and also declaring a good dividend of Rs 15per share which may attract the investor.

For short term investor probably this in notthe right time as the currently the price aredecreasing so the investor have to thinkbefore investing


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THANK YOU..

Documents

49854540 Equity Research Report on Tata Motors