One of the gospels of Warren Buffett, the greatest investor of all time, is that a “great investment opportunity” arises when an “excellent company” is surrounded by unusual circumstances and the stock is mispriced.
Rajat Sharma of Sana Securities has been inspired by this gospel when evaluating whether Tata Motors, the beleaguered blue-chip powerhouse stock, is worthy of a buy now.
In the course of the detailed analysis, Rajat points out that the impact of the slowdown in China on the fortunes of Tata Motors is “clearly exaggerated”. He also opines that there is no fundamental reason why Tata Motors stock should trade at current levels and that the major reason for the beaten down valuations is “aggressive selling by traders”.
At the end, Rajat confidently advises that Tata Motors is a “screaming buy” for pure value investors.
It is worth noting that similar advice has been offered by other savvy investors including Shruti Aggarwal, Motilal Oswal and HDFC Securities. All experts are unanimous in their opinion that the present valuation of Tata Motors is an aberration and that the stock has huge upside in it.
It is also worth noting that Tata Motors is one of the eleven stocks chosen by Motilal Oswal as most likely to make the transition from “good to great”. Motilal Oswal points out that Tata Motors has all the attributes that one expects to find in a “great” company such as (i) Industry Attractiveness, (ii) Disciplined Management, (iii) Disciplined Thought, (iv) Disciplined Action and (v) Expected Results. The report forecasts Tata Motors’ target price at Rs. 488 which is a 65% upside from the CMP of Rs. 296.
So, we need to carefully evaluate the situation and take an appropriate decision.
Thumbs Up,even if gains are less than indicated by various experts, but gains are certain.This is certainly safe than chasing high profile stretched midcaps.
I feel vindicated,although trying be indipendent thinker I always go by my own thought process.
It will be great if Arjun & team can come up with the list of Sellers during the crash. If the price has come down so much and all brokerages are extolling the goat investors to buy, surely some big investors have sold thus far to get the price down. Who are they ? Also it will be interesting to wait for the shareholding pattern as of Sep 30, to see if any of the houses have holdings
Absolutely.You got a really good point.Tata motors price not going to move up any time soon.So any way the big hedge fund/brokerage houses want to offload the stock,but not for this price.So how can they sell It!!! write to their investors that the stock is “SCREAMING BUY”. Most of them will fall into the trap and buy it.
Best is to wait till the dust settles and then once the prices start moving then jump in.
Better not to buy when all experts(so called) are recommending.
Tata motors may have value at Rs.100
Cairn India at Rs.80
Sail at Rs.30
Keep your money safe in pharma, fmcg and consumer goods.
I think its suitable for only genuine long term passive investors
I agree. If you don’t buy Tata Motors now. When you will. This expert said the same thing for many months.
Tata Steel looks more attractive at these levels
None of the analyst have mentioned that
Audi (listed in Germany) is available at 1.5x EV/EBITDA! So what if JLR driven Tata Motors (4x EV/EBITDA) is falling??
Analyst fails to see that Tata Motors comp is not Maruti but BMW/Audi/Merc – All have fallen c. 40% in the last 6 months or so!
The above two facts should raise eye brows on the luxury car industry.
I suppose you are alluding that something is wrong with the luxury car market globally.
Kindly educated we ignorant local indians about what ails the global luxury car market which has lead to this ~ 40% fall in the global leaders you name
Thanks
In the given Stock market meltdown and volatility , many stocks have taken drubbing . Tata motors though coming from powerhouse does not merit its fancy prices on fundamentals . It is not bottomed out even now. New dilution of market levels may only prompt retail investors. Certainly it is not screaming buy as it is paid or market diversionary tactic of inducing buyers with misleading info.
In the given Stock market meltdown and volatility , many stocks have taken drubbing . Tata motors though coming from powerhouse does not merit its fancy prices on fundamentals . It is not bottomed out even now. New dilution of market levels may only prompt retail investors. Certainly it is not screaming buy as it is paid or market diversionary tactic of inducing buyers with misleading info.
Two points. Maybe valuations appear cheaper, but there is more pain round the corner in the form of global meltdown in the next 6 months. As we have seen in the past, these very ‘good’ companies will be available dirt cheap.
Second point is, may be TM will move up, but how much? and by when? it is certainly not a multibagger from here. There are a big number of 10 baggers, 100 baggers out there. Go and hunt for them, it will be worth investing in a micro/small cap company’s 1000 shares for Rs 30000 (which may rise 10 times in 3-5 years) than 100 shares of TM (which may rise 1 time in 3-5 years).
Very true . Worth investing in mid caps and stable sectors like pharma, FMCG & IT to get decent returns over a three year horizon.
Oh i agree with you…TM at the moment isnt the stock for investors looking decent gains only.
The situation TM is in currently – Its for those who can stomach risk and are looking out for mega gains
Big number of 10x and 100x multibaggers out there……
How many have you identified and made tons of money.
I am in dire need of money. Give me just 5 names out the big number of 10x and 100x multibaggers that are out there.
sir
can u pl specify some names of stock which is having potential to give 10 bagger
100 bagger. please so that i will also take position……
It all depends upon the risk you are willing to take for your return. Tata motors may be the best from risk-reward equation.
Could it become 10 bagger in 5 years? Why not…it has a better chance of reaching 2000 than most other stocks. At a business level things are improving, it really is struggling due to over pessimism. Its strange that people were recommending it at 640 and not many are buying at 290.
Not suprised that the ‘not to invest’ outnumber the ‘invest’
Very few ventured out and bought Citibank when it fell to 97cents in 2008/09 during the crisis…. Citi today is USD 48.
Those who did turned out to be the richie rich and not the ones who like in here who keep saying Tata Motors isnt a screaming buy.
A Mr Rao ( apology if i get the gender wrong) mentions it could have a value of 100 ….. So in the pursuit of avoiding about rs200, they an willingly to loose out a definite 5x return
Lets consider it as screaming buy. Howevr, the main question is which is more attractive value buy at cmp – Tata Motors or it’s DVR ?
Can somebody try to figure out with justification for me?
tata motors dvr looks value buy,considering 5 yrs investment atleast 5 times returns expected
Happy that I got in at 290
Tatamotors is at low point. I am sure it will rule auto industry once again. History already proven Tata group never give up.