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Sunday, February 20, 2011

Stock idea : Tata Motors - Large cap stock to buy

Stock analysis of Tata motors for medium term investment horizon.

Tata motors is the largest automobile company in India. Although they are not market leaders in cars segment, they are the market dominant player when it comes to commercial vehicles such as commercial trucks, heavy duty dumpers etc.

Government of India has started promoting infrastructure activities and this means big demand for commercial category vehicles which are used in infrastructure construction activities. Tata motors, being dominating player in this category will be a big beneficiary of this demand.

In cars category too, Tata motors is slowly making it's inroads to capture market share of Indian cars and SUV market. It has been researching new models and launching constantly to increase market share as much as possible.

Jaguar and Land Rover are doing well now. These are the luxury cars and have good demand in US, China and Russia. Margins from these businesses are good for Tata motors and will continue to do so.

All new product launches like Tata winger luxury, strong Nano distribution network and revenues from Jaguar and Land Rover, shows Tata motors is on a good progressive track and will sustain it's growth numbers for at least 2 - 3 years.

With expected revenue growth of around 16% in FY 12, one may buy stock with medium term perspective for target of Rs. 1500.

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