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Old 28th April 2012, 23:39   #16
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Default Re: Tata Motor's stock price up by 72% in 4 months!

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So in my eyes, firstly Tata cars are under performing on the volume front and on top of that, their margins don't excite. Also the segments in which Tata operates is going to see even more intense competition. So if stock markets discount future earnings, I have a dim view of TML's future prospects.
Your thinking is on the right lines but there one thing - TATA's Indian operations are not the driving force for Tata's stock price - its JLR. If possible kindly have a look at the standalone figures of TATA. It would not matter from the stock market point of view if TATA sells less of Nano/Indica/Sumo. Even if the competition is going to intensify it does not matter because the profits from JLR can make up for it. Of course if TATA can prove that they can defend their market share in India too - it will also be a good catalyst for the stock - Unfortunately that has not happened.

Kindly note share prices do not just go up without a reason. Maruti was in the high 900 range in December 2011 and look where it is now - not up like TATA but still it has performed good. In such cyclical companies one has to analyse a good entry point and an exit point. I do not see buying at such levels is a good thing - There needs to be a strong catalyst for the price to go up further. Maruti/TATA has already done the rally. M&M has been fluctuating around 700 levels for quite some time now. I think one should not invest in Auto sector now - Should probably wait for some time and wait for some newsflow.

Last edited by Saanil : 28th April 2012 at 23:43.
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Old 29th April 2012, 18:12   #17
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Default Re: Tata Motor's stock price up by 72% in 4 months!

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Tata motors has a great company in JLR with a very bright future. But Tata needs to use it's British engineers knowledge to much better effect to rescue it's own car business. Why not just get JLR to design a range of cars to take on Ford and co in Europe? They could then build the cars in India/ the UK and target KIA. KIA hired Audi engineers to do the same thing and it worked.
+1 to that. While JLR might be doing well and helping bringing up the stock value of TML for now, they must definitely work something out for the Indian market. Its HIGH TIME to abandon the abused 2 decade old Indica platform which is sadly yet not refined enough as the competition today. IMO only after they get their act in place for the core market would one be truly bullish on TML.
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Old 30th April 2012, 13:04   #18
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Default Re: Tata Motor's stock price up by 72% in 4 months!

Certainly not easy times for Tata's domestic operations.

Nano: Picking up, yet w-a-y below expectations. In fact, I remember Tata stating somewhere that the breakeven point is 20,000 Nanos / month.

UVs: Utility vehicles offer fat profits. Tata's UV division was largely ignored in the last decade, with the focus instead on passenger cars. Tata, in effect, handed over the Indian UV segment to Mahindra. The only significant launch - the Aria - has bombed. Also note that Tata's UV sales have risen in the recent past because of the cheap Sumo Gold (have my doubts on the profit margins).

Passenger Cars: Manza is their star performer, no doubt. The Indica & Vista are doing respectably too. Competition is brutal in this price sensitive segment.

I am wondering how much $$$ the Tata-Fiat JV is taking away?
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Old 30th April 2012, 14:32   #19
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Default Re: Tata Motor's stock price up by 72% in 4 months!

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Originally Posted by rrsteer View Post

I can tell you this: from our research the problem with Nano is that most people (the public out there) while praise the effort, they don't buy the effort. There is huge skepticism about owning a very cheap car (cheap in terms of cost). And this is not related to a brand. I am no fortune teller. But I take a contrarian position here and say diesel Nano would also probably meet with a rather cold response. But I would say this is more of a gut feel.

Overall, I have just talked about Tata Motors Indian passenger car operations. And I know TML is defined more by its CV operations. But I will refrain to start a debate on that yet.
I would tend to go along with your view - up to a point. I don't think the diesel Nano when and if it comes is going to set the market on fire. Neither do I think will it be a complete washout.
I feel Tata will have to think of coming out with some fresh looking models in the UV and hatch segments. Also something more exciting in the sedan range - a refreshed Manza with a diesel automatic maybe? A first in the sub 10 lac range.

Last edited by wilful : 30th April 2012 at 14:58.
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Old 30th April 2012, 14:37   #20
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Default Re: Tata Motor's stock price up by 72% in 4 months!

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I am wondering how much $$$ the Tata-Fiat JV is taking away?
I do not understand why TML is wasting resources on marketing Fiat. Its literally become a parasite sucking on their supply chain, showroom space and definitely testing the patience of the dealership business.

Its a brand that has been underperforming for more than 15 years in India and is simply an additional burden especially when Tata is facing challenging times in the passenger car market. It was selling a dozen odd cars when a JV was set up with Tata and now the sales have improved by another dozen odd, pointless really!!

This new Fiat cafe venture is another experiment after discounted Unos, Sachin Tendulkar Palios, Italian Puntos etc..etc.... Even Berlusconi and his band of merry 18 year old escorts wont attract footfall into a 'Fiat cafe', well at least not with the intention to buy cars!!!

If TML is still planning to stay faithful to this incumbent Italian brand then the operation has to think out of the box. The 'Fiat brand' should be phased out and the energy diverted to a whole new brand like Chrysler or Lancia. Its better to start from a whole new sheet rather than carry the 'Fiat' baggage. Similar to how GM Inida phased out the Opel in favour of Chevrolet.

Fiat is literally dead in India and prolonging the agony on life support does not help either parties.
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Old 30th April 2012, 15:16   #21
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Default Re: Tata Motor's stock price up by 72% in 4 months!

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I am wondering how much $$$ the Tata-Fiat JV is taking away?
Data is from FY11 Annual Report of Tata Motors -

- As of March 31st 2011, Tata Motors has lost Rs. 607.13 Crores on their JV with Fiat India. These are cumulative losses since inception of the JV. It was Rs. 484 Crores on Mar 31st, 2010 - it means they lost Rs. 123 Cr in FY11 alone.

- Tata Motors invested Rs. 200 Crores more in the JV in FY11. Their total investment in the venture stands at Rs. 1200 Crores for a 50% stake.

- (50% stake + Tata Motor's share of Loss at Rs. 123 Cr in FY11) means Fiat India (the JV) lost Rs. 246 Crores in FY11.

We'll get to know about FY12 (Apr 2011 to Mar 2012) situation in a couple of months when Tata Motors comes out with their Annual Report.

Last edited by smartcat : 30th April 2012 at 15:24.
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Old 17th May 2012, 18:41   #22
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Default Re: Tata Motor's stock price up by 72% in 4 months!

Add to all the woes, here is the latest ET report!!

Jaguar Land Rover sales down 31% in April: Report - The Economic Times
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Old 18th May 2012, 14:51   #23
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Default Re: Tata Motor's stock price up by 72% in 4 months!

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Add to all the woes, here is the latest ET report!!

Jaguar Land Rover sales down 31% in April: Report - The Economic Times
It’s a biased report from the times group which is never a surprise. Let’s put things in perspective:

The April, May, June quarter is traditionally the weakest for JLR and its cyclical, it only contributes approximately 20% of its annual sales while the rest 80% is made up in the remaining 3 quarters. So comparing the April sales to stronger months is pointless because it will obviously show a lower figure.


The fact of the matter is JLR’s sales in April’12 has shown an improvement at 25,143 units up 29% over April’11. Jaguar sales individually too were up 17% and stood at 3,603 units and Land Rover sales were up 32% and stood at 21,540 units.


April’12 was a good month for JLR.




Now to notice how 'times group' have played around with words to create a negative report:

  • First they compare the April figures with the previous months knowing fully well that seasonally April, May and June are the dull months for JLR.
  • They also say it’s the lowest figure in 9 months, i.e. comparing it to July’11 to March’12 when sales are stronger. Why 9 months? Instead of 9 months if they take 12 people will obviously notice how sales have actually improved.
We at Team BHP should always scrutinize any piece of information coming from the 'times group' whose reporting standards are shockingly poor and terribly biased.
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Old 18th May 2012, 22:14   #24
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Default Re: Tata Motor's stock price up by 72% in 4 months!

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It’s a biased report from the times group which is never a surprise. Let’s put things in perspective:...
We at Team BHP should always scrutinize any piece of information coming from the 'times group' whose reporting standards are shockingly poor and terribly biased.
Surprisingly, Times also reports Nomura reiterates buy on Tata Motors; target price at Rs 329 - The Economic Times. So it is not all that bad at TM as the media reports.

Quote:
Nomura has reiterated its buy rating on Tata Motors, while increasing its target price to Rs 329 from 326 after the lower-than-expected April sales figures for Jaguar and Land Rover. The dealer said the recent correction offers an attractive entry point.
""We are raising our volume estimates slightly to 363,000 units for FY13F to factor in stronger Evoque volumes,"" the analysts said. ""We also maintain our view that IFRS margins for JLR will expand to 17.7% (16.4% in FY12F) in FY13F and 19% in Q4FY12F on volume leverage, cost reduction initiatives and mix,"" it said.
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Old 9th July 2012, 14:12   #25
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Default Re: Tata Motor's stock price up by 72% in 4 months!

Tata to Buy Chinese Auto Parts at

Surprised to hear Mr. Ratan Tata himself mentioning that Tata will buy sub-assemblies from neighboring China. Not sure if this is good for Tata in the long term. Initially they may start off with ATs, but hope they don't end up importing most of the assemblies (Tier-1s) from China like Rio/Force one.

The article also quotes an analyst speculating that Ratan Tata's successor will need to decide if the company wants to quit the passenger car segment. Agreed that Tata Motors Passenger Vehicles unit is not doing as expected, but this speculation seems to take too many things for granted. Tata is now putting in most of their effort in the CVs and the bus market.
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Old 9th July 2012, 22:29   #26
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Default Re: Tata Motor's stock price up by 72% in 4 months!

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Tata to Buy Chinese Auto Parts at

Surprised to hear Mr. Ratan Tata himself mentioning that Tata will buy sub-assemblies from neighboring China.
The article also quotes an analyst speculating that Ratan Tata's successor will need to decide if the company wants to quit the passenger car segment.
Every body knows Tata Passenger Car division is not helping Tata Motors, the company. But Ratan Tatas vision of "Serving the bottom of the pyramid in India with affordable products" is what is driving this division. Lot of policy decisions of the division are decided by Ratan Tata himself. Another point is, There are 2 choices for the incumbent head, totally get rid of "Passenger car" division. 2. Ignore the social responsibility part and give a free hand to "Passenger Car" division to make their own decisions.
For the chinese parts, it is in-evitable for TM to survive. TM already imports some brake components from China. Premium brands like Volvo and MB imports parts from China. If they dont import, TM will loose the existing cost-benefit they have vis-a-vis foreign competitors.
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