Life Long Portfolio

(Vijay) #41

Cars like Hexa, Nexon, Etc are on the higher side of 8 to 20 lakhs segment. The experience required is different from an Indica customer (mostly T board). I still don’t see how Hexa will sell. So much was spent on the R&D. More than Maruti, Tata needs a premium showroom to sell a 20 lakhs Hexa which is a segment Maruti is absent. It is like selling a beautiful cake for 1000 rupees at a tea stall. Cake may be good but won’t sell at that price . The cost of preparing the cake is from shareholder’s equity

I think it is 3,000 units and not 50,000. Can you please provide source for 50k units? 3k is very small number in terms of EPS.

(Amit Jain) #42

Tata Motors is diversified… Maruti is focussed. Pros and Cons.

From Tata Motors website

Maruti is superior in Cars and SUV, if one has a strong vision about this segment seeing a boom, inspite of the economy being on the backfoot, then it makes sense to buy Maruti (but may be not at PE 33).

Tata Motors and Maruti compete in different but overlapping markets. Therefore, I would like to think of Tata Motors as a Nifty50 company, which will be around for several decades.Buying it at low PEs, and surely selling at high PEs will be profitable (duh!). Holding loyally forever may not be the best approach.

The question is how low is low enough. I think 270 is a safe price, and from thereon one high likely to get 12% to 15% CAGR, with 100% capital safety.

This approach is of immense value to investors who do not want to invest in mid caps.

(Debanjan_M) #43

Well, that’s the total number of Gypsys present in the Army. And the number is around 30000, that was an error by me. Source was a defence update forum. So, far around 3100 vehicles are being supplied.

(Debanjan_M) #44

Well, that’s just another option. The segment leader is Mahindra and the latest entrant Jeep is promising. With XUV and Compass being it’s main competition and none having such facilities and still generating enough customer interest isn’t a premium showroom for a single model just a gimmick? Barring that to let know what Hexa is really capable of, Tata arranges various Off road obstacle courses pan India, which is not a marketing gimmick and makes a little more sense. Yes, maruti is not present in the segment and their earlier entrant Grand Vitara was a super flop. And development cost was not that much hefty for Hexa, as it is basically Aria on a new skin and some added features. Engine was already present in Safari as Varicor 400, transmission was already developed and provided the kind of expertise in four wheel drive and terrain response system they have in Land Rover stable, developing that on Hexa was not a problem either. Hence, at the premium end, the kind of volume it is generating isn’t all that bad.

(shylock) #45

While looking at the Tata Motors operations, we are focusing more on the Passenger Vehicle which accounts for just 30% of the revenue as opposed to Commercial Vehicle which has 70% of the revenue and better margins (Excluding JLR ofcourse)

My rationale for TML doing well is as follows:

  1. JLR operations doing well and is looking to acquire brands like Maserati and Alfa romeo
  2. CV has market share of 55% as of now in India, it dropped from 70% bottomed out at 48% and slowly climbing
  3. RTOs across India is not renewing license to trucks which are 15 years or older, helping in a demand surge for newer trucks
  4. Vehicles to comply to BS6 norms by 2020, Tata motors with JLR which operates in europe (already BS6 compliant) and Daewoo CV, are better placed to take benefit of this decision
  5. Electrification of vehicle again is something where Tata Motors has all the R&D in place and can be seen from them winning contract of 10,000 Electric Tigors and Nano electric (for cab aggregators)
  6. Organisation has beccome leaner with recent organisational restructuring

I have only given qualitative points, will be running numbers in some time.

Disc: Closely watching automobile sector and Tata Motors

(Amit Jain) #46

For stocks such as Tata Motors, one need not focus on the progress. But, only on the entry price, which currently is far from good.

That is the advantage of investing in Index Stocks. You can take progress and growth for granted.