Tata Motors: Revving Up For Growth

Tata (TTM) is India’s largest automaker. Even though they are Fiat’s exclusive distributor, Tata has a full line of their own autos. Tata is listed on the NYSE for the past two years, and from this gained a fair amount of cash from ADRs. Once those investment dollars came in, Tata took that cash, and invested globally by acquiring Daewoo’s truck plants in South Korea and a 21% stake in Spanish bus maker Hispano Carrocera. Tata also has defense contracts with the Indian government to provide troop carriers.

Aside from the preliminary information, Tata Motors has made moves to start selling in China. China, along with India, doesn’t have a lot of cars on the road at the moment, allowing Tata to tap into the two largest markets for vehicles in the world. Vehicle sales were up 28% for the quarter. Tata’s Q3 net profits were up 12% as well.

Like all Indian stocks, this stock isn’t being bought by the major financial institutions. Why you might ask? A lot of institutional investors don’t want to take the risk, and invest in ETFs instead. Thus, they ignore the tendency to buy up these off shore stocks because of “risk.” It makes me angry that US investors don’t do this because they could make so much money.

Keep in mind when I recommend these stocks, especially international stocks, I would tell you to hold off on buying. Tata is near its high, so watch it over the next couple of days, and buy when it hits a small bump. However I assure you it will grow gradually over the course of 2007.

Comments

[robert99]

You didn't mention Tata's $3,000 car, which, I believe, is slated to be released in late 2008. For a burgeoning country, with a growing lower middle class, a cheap, well made car is genius. They ARE well made too - I work with some Indians, and I asked a few of them what they thought about Tata motors, and they unanimously responded with "Tata makes many things, and they are a good company. Their $3,000 car will be very popular." They not only knew about the $3,000 car, they are EAGERLY AWAITING IT. At a P/E of 19, TTM is a steal.