Tata Motors
BSE SENSEX
28,241
S&P CNX
8,741
3 February 2017
Update
| Sector:
Automobiles
CMP: INR523
TP: INR775(+46%)
Buy
Creates ‘TAMO’ sub-brand/vertical in the PV business
Another initiative to profitably attain top-3 in India PV industry by 2019
Stock Info
Bloomberg
Equity Shares (m)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
M.Cap. (INR b)
M.Cap. (USD b)
Avg Val, INRm
Free float (%)
TTMT IN
3,395.9
599 / 266
3/1/46
1,776.1
26.3
4,183
65.3
Tata Motors announced its new strategy for the PV business and sub-brand/vertical
TAMO. We see these initiatives as step in right direction and infuse more energy in
TTMT’s PV business by giving autonomy and ring-fencing TAMO vertical to focus on
innovation. This could long way in transforming PV business through agility, adaptability
and making business leaner and meaner. Key highlights:
Financials Snapshot (INR b)
Y/E Mar
2016 2017E
Net Sales
2,756 2,883
EBITDA
402.4 356.3
NP
125.2
98.5
Adj. EPS (INR)
36.9
29.0
EPS Gr. (%)
-15.5 -21.3
BV/Sh. (INR)
237.9 265.9
RoE (%)
18.3
11.5
RoCE (%)
14.3
8.8
P/E (x)
14.2
18.0
P/BV (x)
2.2
2.0
2018E
3,366
466.9
154.9
45.6
57.3
308.3
15.9
11.9
11.5
1.7
Shareholding pattern (%)
As On
Sep-16 Jun-16 Sep-15
Promoter
33.0
33.0
33.0
DII
14.5
16.8
17.7
FII
26.1
25.0
40.9
Others
26.4
25.2
8.4
FII Includes depository receipts
Stock Performance (1-year)
Tata Motors
Sensex - Rebased
610
520
430
340
250
‘TAMO’ aspires to be an agile, ring-fenced vertical operating in an incubating
environment towards new technologies, business models and partnerships in
order to define future mobility solutions.
‘TAMO’ as a new, separated vertical will operate in the first step on a low
volume, low investment model to provide fast tracked proves of technologies
and concepts.
The first product developed by TAMO will be premiered at the Geneva Motor
Show in March 2017.
The mindset of people in TAMO will be very different from that of those in Tata
Motors manufacturing cars in large volume. TAMO will have a totally different
eco-system.
Under new PV strategy, TTMT aims to consolidate is platforms from current 6
to 2 over next 2 years, thereby reduce development cost, improve time to
market, derive scale and efficiencies.
Further, it aims to be among the top three domestic PV players with a
sustainable financial performance and exciting innovations by 2019.
TTMT is one of our top-picks in autos. Buy with TP of ~INR775 (FY19 SOTP
based).
TAMO – New vertical to bring in adaptability, agility and start-up culture
TTMT today presented its new PV strategy and introduced its new sub-
brand/vertical – ‘TAMO’.
TAMO aspires to be an agile, ring-fenced vertical operating in an incubating
environment towards new technologies, business models and partnerships in
order to define future mobility solutions.
TAMO as a new, separated vertical will operate in the first step on a low
volume, low investment model to provide fast tracked proves of technologies
and concepts.
These cars sold under the TAMO brand will deliver the proof of concept and if
the response is good, the model or parts of the car or technologies involved or
the manufacturing processes will be absorbed by Tata Motors which will
continue to focus on building high volume products.
Investors are advised to refer through important disclosures made at the last page of the Research Report.
Motilal Oswal research is available on www.motilaloswal.com/Institutional-Equities, Bloomberg, Thomson Reuters, Factset and S&P Capital.
Jinesh Gandhi
(Jinesh@MotilalOswal.com); +91 22 6129 1524
Aditya Vora
(Aditya.Vora@MotilalOswal.com); +91 22 6129 1533