Buy Tata Motors (DVR); target of Rs 968: KRChoksey

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Buy Tata Motors (DVR); target of Rs 968: KRChoksey

KRChoksey is bullish on Tata Motors (DVR) and has recommended buy rating on the stock with a target of Rs 968 in its March 28, 2011 research report.

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KRChoksey is bullish on Tata Motors (DVR) and has recommended buy rating on the stock with a target of Rs 968 in its March 28, 2011 research report.

"Tata Motors is leading manufacturer of commercial vehicles in India. The company is among the top three passenger car manufacturers in India. The company is the world's fourth largest truck manufacturer, and the world's second largest bus manufacturer. The company has many subsidiaries but the most prominent among these is Jaguar-Land Rover (JLR) (a British car manufacturing company) which it acquired in 2008 and converted it from a loss making company to a profit making one. JLR contributes 54% to the company's revenues. The company's product portfolio ranges from the ultra low cost car Nano to the uber luxurious cars from JLR, from its ground breaking invention of the light commercial vehicle (LCV) the Ace to the international Prima Truck range."

"Tata motors had acquired Jaguar and Land Rover from Ford Motor Co. During acquisition the unit was a loss making one. But the management at Tata motors was able to achieve a turn around and not just stop losses but convert it into a profitable venture. Today around 54% of Tata Motors Revenues comes from JLR. Tata motors had begun as a commercial vehicle manufacturer. A decade ago, Tata Motors had begun to manufacturer passenger vehicles. Today Tata Motors is one of the leading automobile makers in the world. It is India's largest Automobile manufacturer. Its passenger cars range from the worlds cheapest car, the Nano, to its newest cross over the Aria to the luxurious cars from JLR."

"The company has a vast portfolio of commercial vehicles ranging from its super successful LCV, the Ace, to the its sturdy tractor trailers, haulage vehicles, buses, hybrid buses, etc to the Prima trucks built for sale in international markets. Tata Motors is a part of the Tata group which is headed by Mr. Ratan Tata who is also the chairman of Tata Motors Ltd. Also the management includes the likes of Carl Peter Foster who has a vast experience and has also headed the BMW Group for 20 years. The financial and operational stability also comes from people with vast experience in their field."

"The performance of the company has increased considerably during the Q2FY11 and Q3FY11 and the outlook for Tata Motors continues to be positive, given the robust growth in the economy, increase in sales and profitability of JLR, improvement in industrial and mining sector, completion of ramp-up at its Sanand plant for Nano. The only concern is the supply constraint it faces from Ford for engines and from other suppliers for RM. At the CMP of Rs 693, Tata Motors DVR is trading at 5x its FY11E EPS of Rs 138.4 and at 4.4x its FY12E EPS of Rs 159.2. We recommend a "BUY" on the stock with a target price of Rs 968, using target multiple of 7x FY11E EPS, with an upside of 40%," says KRChoksey research report.

Disclaimer: The views and investment tips expressed by investment experts on moneycontrol.com are their own, and not that of the website or its management.Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

To read the full report click on the attachment