Tata Motors Ltd -Multibagger Stock Analysis 2022

In this article, we can analyze theTata Motors Ltd as a Potential Multibagger Stock as on 2022 November.

CompanyWebsiteLocationLeadersHighlightsAwards
ProductsP&LPositivesNegativesChecklistSummary

Tata Motors Ltd

Tata Motors Group is a leading global automobile manufacturer. Part of the illustrious multi-national conglomerate, the Tata group, it offers a wide and diverse portfolio of cars, sports utility vehicles, trucks, buses, and defense vehicles to the world Mr. Natarajan Chandrasekaran is the current Chairman and Non-Executive director. Mr. Shailesh Chandra is the Managing director.

TML is a formidable player in the CV segment in India and offers a broad portfolio of automotive products including trucks, buses, coaches, and defense vehicles. It is the leading player in the CV segment, with a market share of 45% during FY22.
TML has been consistently reporting an increase in its PV market share from 4.8% in FY20 to 12.1% in FY22 to 14.3% in Q1FY23.
The company continues to be a market leader in the EV segment with a market share of 87% in FY22 and 88% in Q1FY23.

Tata Sons Support

As on June 30, 2022, Tata Sons Private Limited (TSPL) held a 43.73% stake in the company. TSPL
has also provided financial support to TML through funds infusion to the tune of ₹6,494 crore in FY20 and FY21.

Tata Daewoo Commercial Vehicle Co. Ltd

In 2004, the company acquired Korea’s second-largest truck maker Daewoo Commercial Vehicles. Today, it has emerged as a global player in the comprehensive commercial
vehicle sector and it exports to more than 60 countries. It is working with TML to simultaneously grow into global market leaders.

Acquisition

On August 7th 2022, Tata Passenger Electric Mobility Limited, a subsidiary of Tata Motors limited announced acquisition of Ford India’s manufacturing plant at Sanand, Gujarat for Rs725cr exclusive of tax.

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Website

https:// tatamotors.com

Location

It has operations in India, the UK, South Korea, South Africa, China, Brazil, Austria and Slovakia through a strong global network of subsidiaries, associate companies and Joint Ventures (JVs), including Jaguar Land Rover in the UK and Tata Daewoo in South Korea.

The Group owns 10 manufacturing facilities in India, 5 in UK, 2 in Europe, and has also set up a manufacturing facility in China in a Joint Venture with Chery Automobiles. It also operates various R&D centres from UK, North America, Europe and India. 

Leaders

Mr. Natarajan Chandrasekaran is the current Chairman and Non-Executive director. He is an Indian businessman, and the chairman of  Tata sons.  He was the chief operating officer (COO) and executive director of Tata consultancy services(TCS), where in 2009, he became a chief executive office(CEO).He was also the chairman of Tata Motors and Tata global Beverages (TGB). He became the first non-Paris and professional executive to head the Tata Group.

Mr. Shailesh Chandra is the Managing director.Shailesh served as Head of Corporate Strategy & Business Transformation and President, Electric Mobility Business & Corporate Strategy for Tata Sons.Shailesh Chandra is currently President of Passenger Vehicles Business Unit at Tata Motors .

Mr. Girish Wagh is the current Executive Director. He is currently the Head, Commercial Vehicle Business Unit. He earlier worked in the capacity of Sr. Vice President(Tata Small & Passenger Car Segment) & Head Project Planning and Program Management of Tata motors. He is a key figure in the Tata nano’s project.

Mr. O P Bhatt, Chairman is the Non-Executive Independent Director. He is an Indian banker and was the  chairman of state bank of india. Presently, he is an independent director on the board of the ‘Maharatna’ Central Public Sector Enterprise – Oil and natural gas Ltd(ONGC), Tata Steel Ltd and also Hindustan Unilever Ltd .he was made chairman of Tata steel.

Highlights

Tata Motors is a $35 billion global automobile manufacturing company. Its diverse portfolio includes an extensive range of cars, sports utility vehicles, trucks, buses, and defence vehicles. Tata Motors is one of India’s largest OEMs offering an extensive range of integrated, smart, and e-mobility solutions . Tata Motors excels when it comes to innovation through intensive research and development. Their ability to make the least expensive car on the market, the Nano which will retail for $2,500, is far beyond what any other car dealership has created. This innovation gives Tata Motors their main competitive advantage.

Subsidiaries

  • Jaguar Land Rover Automotive Plc
  • Tata Motors Passenger Vehicles Ltd (TMPV Ltd)
  • Tata Passenger Electric Mobility Ltd (TPEM)
  • Tata Motors European Technical Centre PLC (TMETC)
  • Tata Motors Insurance Broking and Advisory Services Limited (TMIBASL)
  • TMF Holdings Limited
  • TML Distribution Company Limited (TDCL)
  • TRILIX Srl
  • Tata Technologies Limited
  • Tata Marcopolo Motors Limited (TMML)
  • TML Holdings Pte. Limited
  • Tata Daewoo Commercial Vehicle Company Limited

Awards

  • 3rd consecutive Commercial Vehicle Manufacturer of the Year along with five other segmental awards at prestigious Apollo CV awards 2021
  • CII Customer Obsession award for 3rd year in a row – CV Business
  • Car and Bike Awards 2021 – EV of the year, Green Car of the year – Nexon EV
  • Car and Bike Awards 2021 – Premium Hatchback of the year, Best Safety Tech – Tata Altroz
  • Indian Car of the Year Awards – Indian Car of the Year – Tata Altroz, Green Car Award Nexon EV
  • Auto Car India Awards – Best Design & Styling – Tata Altroz, Green Car of the Year Award – Nexon EV
  • Won multiple Golden Peacock Awards – innovative product/service – customer care CVBU, environment management – Sanand, PVBU, Eco-innovation – ERC Innovative Product/Service Award – DigiVOR and 9×9 electric bus
  • CII Design Excellence award – Tata Nexon and Intra
  • National Energy Conservation Award (NECA) 2020 – TML bagged this award for its energy conservation measures, instituted by the Bureau of Energy Efficiency (BEE).
  • CII Energy Efficiency summit – National Energy Leader Award 2020 – Pune (CV) and Pantnagar plants, Energy Efficient Unit award for significant progress in energy efficiency – Jamshedpur, Lucknow and Pune (CV) plants
  • Rated amongst the top 10 companies in BSE 100 (companies evaluated by IiAS on the Indian Corporate Governance Scorecard) – Moved into the Leadership category in 2019-20.

Products & Services

  • Passenger vehicles
  • Commercial vehicles
  • Electric vehicles

Profit & Loss

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Expansions

  • Launched Tata Punch, subcompact SUV with bold and stunning design, premium and spacious interiors.
  • Introduced advanced iCNG technology in Tiago and Tigor.
  • Launched Altroz DCA, offering seamless drive experience to customers.
  • Launched exciting variants including dark range of vehicles, Kaziranga range of SUV’s, Tiago NRG and Safari Gold. Expanded our product portfolio in FY22. Launched new Tigor EV with an extended range of 306 km. Launched Xpres-T EV with two range options: 162km and 213km to meet the requirement of fleet consumers. Recently launched Nexon EV Max, with 33% higher battery capacity and ARAI certified range of 437 km.
  • In FY22, Jaguar Land Rover introduced the New Range Rover, as the embodiment of modern luxury, with breath-taking modernity to its exterior and a highly sophisticated, reductive interior with an intuitive approach to relevant technology.
  • Recently, launched Range Rover Sport – the third generation of land Rover’s luxury performance SUV is the most desirable, technologically advanced and capable yet, mixing an imposing road presence with instinctive driving responses using the most advanced combination of chassis technologies ever fitted to a Land Rover.

Positives

  • Reputation of TATA Brand & Promoters
  • Loss is reducing year after year
  • Revenue Growth is Visible

Negatives

  • Company is loss making
  • Tata Punch not powerful enough to turnaround
  • Price is 5X of Book Value even with losses in 3 years
  • Pledged holdings exists
  • Interest Coverage Ratio is decimal
  • Debt Equity Ratio is High at 5X

Warren Buffett Checklist

FactorValue
Economic MoatGood
GrowthModerate
ValuationModerate
DebtBad
IntegrityGood

Summary

Based on the observations above we don’t see an opportunity beyond 2X in a 5 year period.

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