Tata Motors - DVR

You need to look at companies which are already at size of what Tata motors will be like in 2025

Volkswagen sells more than 300000 electric vehicle today. … Its brand like SEAT, ŠKODA , The Audi, Lamborghini and Ducati brands, Porsche, Bentley and Bugatti brands.are 100X more valuable than JLR … Even The Truck & Bus brand like Scania and MAN brands are more valuable …

Inspite of all this Volkswagen is valued at 60+ billion USD , with EV/ EBITDA of 7.7 and EV / Sales of 1 and price to book at 0.69 …

Remember BMV , Mercedes, Hyundai , Toyota and Volkswagen all are present in India have much stronger ability to invest in EVs + with stronger brands than Tata motors and are at equal or less valuation than Tata motors

All said … this space will be hyper competitive in next 5 years and execution will be key to success …

While Tata motors DVR at < 90 was decent call option , it is now more than fairly priced

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Growth of Volkswagen cant be compared to Tata Motors for 2 reasons:

  1. Volkswagen cant compete in EV with Tata motors in India as they will land into higher final price and Unlike other european countries India is highly sensitive to prices. Only Tata, M&M, Maruti Suzuki can come with price range suitable for India and this has been seen in past in ICE models too. Volkswagen cant do that thing in EV which they couldnt do in ICE and that too when Tata Motors has whole ecosystem with them.
  2. Volkswagen is at 15 PE whereas JLR is just at 2 PE so it’s cheaper …very cheap. Volkswagen is like a large cap that grows hardly 5-6% per annum but Tata motors has a lot space to grow
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How have you arrived at 2 PE for JLR → Tata motors has been reporting losses for last 4 years …
Hence I compared on EV / Sales and EV EBITDA - which are right measures for sector plagued in debt .

This was only to state that brands of JLR are not as valuable as Volkswagen brands … On EV Tata is no comparison to German and Chinese players yet it can do well … You can imagine that value and pay high price … I have stated price band which I was comfortable and hence bought …

I am bullish on this company and hence I am long … But at the same time we cannot be devoid of risk it faces … . Pl look at my past post on this company .

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BUT ARE WE READY? WHAT’S OUR STATE OF PREPAREDNESS

On Transformation within Tata group including Tata Motors.

Disc: Invested in Tata motors - DVRs 2.5% of PF. No recent transactions. 1% position in Tata Power and Tracking position in TCS. Looking to increase.

Tata Motors has inked an agreement with the Government of Maharashtra to support setting up a Registered Vehicle Scrapping Facility (RVSF) in the state. The proposed centre to have a capacity of recycling 35000 vehicles a year.

Monthly sales of Tamo pv and cv.

And Tata motors overtakes Hyundai to take no. 2 position in PV sales.

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Tata Motors to launch 3 affordable EV’s in India

Indian car safety rating system soon.
This will benefit Tata motors and M&M.

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Mostly this will benefit the OEM players.
Additional safety features if any mean additional cost and opportunities for equipment manufacturing companies.
Sona Comstar
KPIT
Minda
Airbag manufacturing etc

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But when it comes to crash test, Tata motors and M&M are the ones who stand out already. This has more emphasis on Vehicle structure engineering, which can absorb maximum impact and associated shock and protect the passengers.

Maruti Suzuki is quite bad in this aspect.

In a crash, the main purpose of the vehicle is to protect the passengers rather than being intact. A vehicle which stands solid need not be the safest. The impact shock will then be transferred to it’s passengers causing more harm. A vehicle is designed to collapse at predefined structural points absorbing the impact. So a safe car will be something that collapses but keeps the passengers in good shape.

Sl.No. Car GNCAP Rating with Adult Occupant Protection (AOP) score of the maximum 17 points
1 Tata Punch 5 stars (16.45)
2 Mahindra XUV300 5 stars (16.42)
3 Tata Altroz 5 stars (16.13)
4 Tata Nexon 5 stars (16.06)
5 Mahindra XUV700 5 stars (16.03)
6 Mahindra Marazzo 4 stars (12.85)
7 Volkswagen Polo 4 stars (12.54)
8 Mahindra Thar 4 stars (12.52)
9 Tata Tigor 4 stars (ICE - 12.52/EV - 12)
10 Tata Tiago 4 stars (12.52)
11 Maruti Suzuki Brezza 4 stars (12.51)
12 Renault Triber 4 stars (11.62)
13 Ford Aspire/Figo 3 stars (10.49)
14 Maruti Suzuki Ertiga 3 stars (9.25)
15 Renault Duster 3 stars (9.00)
16 Kia Seltos 3 stars (8.03)

Source:

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I am newbie to stock markets. Can someone decipher why Tata motors is reporting huge depreciation costs in the last 4 years ?

It is eating into their operating profits and as a net result company is reporting losses.

Does anyone had idea when this reporting of depreciation will stop ?

Hope my question makes sense …

@vvabhiram, The AR has the details. You need to check the reports for each FY to know the exact details for that period.

Snippets from the statutory report available for FY18-19 from the below link.

Depreciation and Amortization: During FY 2018-19, depreciation and amortization expenditures increased by 9.5% to Rs.23,590.63 crores from Rs.21,553.59 crores in FY 2017-18. The depreciation increase of 12.2% to Rs.12,200.42 crores as compared to Rs.10,874.34 crores in FY 2017-18 is mainly at Jaguar Land Rover due to new product launches and opening of new facilities (Slovakia). The amortization expenses have also increased by 6.7% to Rs.11,390.21 crores in FY 2018-19 from Rs.10,679.25 crores in FY 2017-18, and are attributable to new products introduced during the year, mainly at Jaguar Land Rover business.

Most analysts give their recommendation/research report for Tata Motors but they dont talk about Tata Motors-DVR. Only voting rights are different between them. Is there any other thing I am missing? Pls explain.

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@Baratam_Srinivas, the initial few posts in this thread explains the difference between Tata motors and DVR. However, any analyst report on Tata motors should hold good for DVR as well. Most institutions will shy away from buying them for the lack of voting rights. When Tata motors start paying regular dividends, the discounted rate of DVR shares should reduce significantly in line with how these shares are treated in the global markets.

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