Tata Motors Continues to Present a Long-Term Investment Opportunity

Tata Motors (TTM) has surpassed Hyundai in car sales to become the 2nd largest car maker in India by sales.  Tata Motors has managed to out sell Hyundai for three straight months (December, January and February).  The success has been attributed to the successful November launch of ‘Xeta’.  The compact car costs only Rs. 229,000 and is a petrol variant of its diesel based model ’Indica’.   However, Hyundai is expected to launch its own Diesel powered compact car in the future to take on Tata Motor’s ‘Indica’.  Nevertheless, Tata Motors is expected to launch its Rs. 100,000 car ($2,222 approx.) which might give it a chance to take the number one spot away from market leader Maruti. 

Also, the latest news coming from the Geneva Auto show is that Tata Motors is planning to make hybrid cars.  The company is currently in talks with Ballard Power Systems (BLDP) which makes Fuel Cells. 

The company also showed the Tata Elegante (below) at the Geneva Auto Show.

Tata Motors sales numbers for the month of February:

• Total Vehicle sales were 53,707 - 19% YoY
• Commercial vehicles: 27,859 - 22% YoY
• Passenger vehicles: 21,322 - 19% YoY
• Exports grew by only 6% YoY to 4,526 vehicles

The February numbers don’t look great as far as the growth is concerned but this stock remains very intriguing at this point. It’s currently trading at about $17.50 and might have more downside if the weakness in the Indian financial markets continues to push Indian ADRs down. It’s a good company in a booming auto market with a 1.6% dividend and a low P/E. I am keeping an eye on this to possibly start a position in the near future.

Disclosure: I have no positions in TTM or BLDP.