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Bull of the Day: Tata Motors (TTM)

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Excellent quarterly results, thanks mainly to record sales by Jaguar Land Rover unit have sent estimates for this Indian automaker higher and the stock to Zacks Rank # 1 (Strong Buy).


About the Company


Tata Motors Limited (TTM - Free Report) is India's largest automobile company, and a leader in commercial vehicles in each segment, and among the top in passenger vehicles.  It is also the world's fifth largest truck manufacturer and fourth largest bus manufacturer.


The company also has operations in the UK, South Korea, Thailand, South Africa and Indonesia. It acquired Jaguar Land Rover in 2008 from Ford to get a global presence in the luxury vehicle market. 

Tata Motors’ ADR is listed on the New York Stock Exchange since September 2004.


Excellent Quarterly Results


On February 10, Tata Motors reported the results for their fiscal third quarter ended Dec 31. Consolidated net profit surged almost threefold to $775 million, thanks mainly to rising sales of British Jaguar Land Rover unit.


Jaguar Land Rover sales increased 23%, with demand for their luxury vehicles increasing in China, North America and Europe. Tata Motors had acquired both these brands from Ford Motors in 2008 and turned them around into a major profit source. The management expects the sales and performance momentum for Jaguar Land Rover to continue with a richer product and geography mix.


On the other hand, sales of Tata-branded vehicles fell 36% in India due to weakening demand, increasing competition and a tight financing environment. The management hopes that recent launches including Nano Twist and Vista VXTech and upcoming products like BOLT and ZEST will be able to drive sales in India and some of the international markets where they are expanding.


Rising Estimates


After excellent results, analysts have raised their estimates for the company. Zacks Consensus Estimates for the current and next fiscal year are now $3.84 and $4.30 per share up from $3.20 and $3.97 per share respectively, 60 days ago. TTM has delivered positive surprises in three out of last four quarters.


The Bottom Line


With continued focus on investment in new products and new technologies and expansion in international markets, Tata Motors’ growth outlook remains strong, despite some headwinds in the domestic markets.


Further, Zacks Industry Rank of 31 out of 265 (top 12%) also indicates strong chances of outperformance in the coming months.

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