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About the Company

Tata Motors Limited (“Tata Motors” or the


“Company”) is among the largest automobile
manufacturing companies in the world by
volume, and has presence across a range of
passenger and commercial vehicles.
STRENGTHS
Dominant Market Position
Tata Motors is the largest automobile manufacturing company in the world by
volume, with presence across a range of passenger cars and Commercial
Vehicles (CV). It is the market leader in terms of volumes in CV Segment
(including, Light Commercial Vehicles + Medium & Heavy Commercial
Vehicles segments) and enjoys market share of ~ 58% in CV segment
which has grown consistently over the last few years.
Rural Market Penetration
Tata Motors has been focusing on improving the mix of its products and
markets. In India, future growth is expected to be driven largely in tier 2
and tier 3 cities. With growing rural affluence and broader connectivity,
the Indian automobile industry will benefit from an increased demand in
rural areas.
New Product launches Tata Motors is planning to launch a series of
passenger cars (hatchback, sedan and sport utility) vehicle until FY2020 to
increase its market share and has plans to launch two new cars every year.
CHALLENGES

Intense Competition
Competition in the automobile industry is likely to further intensify in view of
the continuing globalization and consolidation in the worldwide
automotive industry. On the domestic front, Tata Motors competes
primarily against Maruti Suzuki India Limited, Mahindra & Mahindra,
Ashok Leyland, Hyundai Motors India and Force Motors. The competition
within the industry is increasing further with new players entering the
market and some smaller players catching up.
Dependent on Jaguar Land Rover Jaguar Land Rover contributes a large
portion of the Company’s consolidated revenues. A decline in demand for
Jaguar Land Rover vehicles in its major markets, including North America,
China, or inability to maintain its pricing strategy, may significantly impact
the company’s business and financial position.
Volatile Input Prices Volatile commodity prices, including steel, aluminium,
copper, zinc, rubber, could impact company’s profitability.
PROFIT AND LOSS ACCOUNT
Consolidated (Rs. Cr)

Particulars FY 2013 FY 2014 FY 2015 FY 2016 FY 2017

Total Income 1,88,817.63 2,32,833.66 2,62,796.33 2,75,561.11 2,74,492.12


from
Operations
Expenses 1,64,270.33 1,97,995.96 2,23,557.68 2,38,804.88 2,44,903.43

Operating 24,547.30 34,837.70 39,238.65 36,756.23 29,588.69


Profit
Depreciation 7,569.30 11,078.16 13,388.63 17,014.18 17,904.99

Finance Costs 3,553.34 4,733.78 4,861.49 4,623.35 4,238.01

Other income 811.53 828.59 898.74 981.72 754.54

Exceptional 602.71 985.38 184.71 2,119.55 (1,114.56)


items

PBT 13,633.48 18,868.97 21,702.56 13,980.87 9,314.79

Tax 3,770.99 4,764.79 7,642.91 2,872.60 3,251.23

PAT 9,862.49 14,104.18 14,059.65 11,108.27 6,063.56


PROFITABILITY ANALYSYS
Consolidated (%)

Particulars FY 2013 FY 2014 FY 2015 FY 2016 FY 2017

Operating 13.00 14.96 14.93 13.34 10.78


Profit Margin
Ratio

Net Profit 5.22 6.06 5.35 4.03 2.21


Margin Ratio
KEY BALANCESHEET FIGURS
Sources of Funds / (Rs. Cr)
Liabilities

Particulars FY 2012 FY 2013 FY 2014 FY 2015 FY 2016

Share Capital 634.75 638.07 643.78 643.78 679.18

Reserves & Surplus 32,515.18 36,999.23 64,959.67 55,618.14 80,103.49

Net worth 33,149.93 37,637.30 65,603.45 56,261.92 80,782.67


(shareholders funds)

Minority Interest 307.13 370.48 420.65 433.34 888.26

Long term borrowings 27,962.48 32,110.07 45,258.61 56,071.34 51,876.31

Current liabilities 73,268.07 86,285.90 92,356.13 1,00,272.00 1,10,820.46

Other long term 8,529.96 8,319.15 14,787.15 24,276.19 21,763.82


liabilities and
provisions

Deferred Tax 2,165.07 2,019.49 1,572.33 1,343.20 3,166.08


Liabilities

Total Liabilities 1,45,382.64 1,70,026.45 2,19,998.32 2,38,657.99 2,69,297.60


Application of (Rs. Cr)
Funds / Assets

Particulars FY 2012 FY 2013 FY 2014 FY 2015 FY 2016


Fixed Assets 56,212.50 69,483.61 97,375.40 1,12,422.59 128,850.67
Noncurrent 1,391.54 1,515.40 1,114.39 1,240.50 1,253.15
Investments
Current assets 64,461.47 74,006.73 95,845.33 1,01,758.40 1,15,315.13

Long term 14,684.06 15,465.46 18,337.29 15,806.31 16,315.70


advances and
other
noncurrent
assets

Deferred Tax 4,539.33 4,428.93 2,347.08 2,733.20 2,726.43


Assets
Goodwill on 4,093.74 4,102.37 4,978.83 4,696.99 4,836.52
consolidation
(net)
Total assets 1,45,382.64 1,70,026.45 2,19,998.32 2,38,657.99 2,69,297.60
Efficiency Analysis

Particulars FY 2012 FY 2013 FY 2014 FY 2015 FY 2016

ROCE 36.33 35.01 31.31 34.80 27.52

ROE / RONW 40.77 26.28 21.33 24.86 13.75


Valuation Analysis
Particulars FY 2013 FY 2014 FY 2015 FY 2016 FY 2017
Total Income 1,88,817.63 2,32,833.66 2,62,796.33 2,75,561.11 2,74,492.12
from
Operations
(Rs. Cr.)

Growth (%) 13.98 % 23.31 % 12.87 % 4.86 % (0.39 %)


PAT (Rs. Cr.) 9,862.49 14,104.18 14,059.65 11,108.27 6,063.56
Growth (%) (27.34 %) 43.01 % (0.32 %) (20.99 %) (45.41%)
Earnings Per 31.02 43.61 43.44 32.71 22.04
Share – Basic
(Rs. )

Earning Per 30.94 43.60 43.43 32.70 22.03


Share –
Diluted (Rs. )

Price to 8.70 9.66 10.86 11.81 21.77


Earnings
Dividend History
The Company has maintained an average
dividend yield of 0.98 % over the last 5
financial year.
Liquidity and Credit Analysis

Current Ratio
Higher current ratio implies healthier short term liquidity comfort level. A current ratio
below 1 indicates that the company may not be able to meet its obligations in the
short run. However, it is not always a matter of worry if this ratio temporarily falls
below 1 as many times companies squeeze out short term cash sources to achieve
a capital intensive plan with a longer term outlook. Tata Motor’s average current
ratio over the last 5 financial years has been 0.97 times.
Long Term Debt to Equity Ratio
Companies operating with high debt to equity on their balance sheets are vulnerable
to economic cycles. In times of slowdown in economy, companies with high levels
of debt find it increasingly difficult to service the interest on their borrowings as
profit margins decline. We believe that long term debt to equity ratio higher than
0.6 – 0.8 could affect the business of a company and its results of operations.
Tata Motor’s average long term debt to equity ratio over the last 5 financial years has
been 0.80 times which indicates that the Company is able to
withstand any economic slowdowns.
• Interest Coverage ratio
• Interest coverage ratio indicates the comfort with which the
company may be able to service the interest expense (i.e. finance
charges) on its outstanding debt. Higher interest coverage ratio
indicates that the company can easily meet the interest expense
pertaining to its debt obligations. In our view, interest coverage
ratio of below 1.5 should raise doubts about the company’s ability
to meet the expenses on its borrowings. Interest coverage ratio
below 1 indicates that the company is just not generating enough to
service its debt obligations.
• Tata Motor’s average interest coverage ratio over the last 5 financial
years has been 7.55 times which indicates that the Company has
been generating enough for the shareholders after servicing its
debt obligations.
Ownership pattern
• In its latest stock exchange filing dated 31 March 2017,
Tata Motors reported a promoter holding of 34.73 %.
Large promoter holding indicates conviction and
sincerity of the promoters. We believe that a greater
than 35 % promoter holding offers safety to the retail
investors.
• At the same time, institutional holding in the Company
stood at 39.16 % (FII+DII). Large institutional holding
indicates the confidence of seasoned investors. At the
same time, it can also lead to high volatility in the stock
price as institutions buy and sell larger stakes than
retail participants.