In a bid to boost its passenger vehicle business, Tata Motors has poached Mayank Pareek, chief operating office (marketing and sales) from Maruti Suzuki. Pareek has been designated as president, passenger vehicle business unit at Tata Motors.
From a 2008 peak of 26%, Tata Motors' share of the total India vehicle market has retreated to 17% this year. The decline was largely due to drop in passenger vehicle market share. This was driven by Tata Motors taking longer to introduce new models versus its peers, deregulation of diesel prices compromising its diesel range, and higher growth in motorcycle sales versus passenger car sales in a weak Indian economy.
The company’s commercial vehicle share has also declined, but it continues to retain an industry-leading 54% of the medium and heavy commercial market.
Tata Motors benefits from substantial profitability and returns generated by its premium brands: Jaguar, and Land Rover (JLR). Over the past five years, JLR’s revenue has grown at a compound annual rate of 40%, with global volume growing 21%.
Post the fiscal 2015 first-quarter sales of Rs 646 billion, up 38% against the prior corresponding period, we raised our fair value estimate to Rs 550 per share, from Rs 449.
We increased our revenue growth assumptions for the Indian business to 11.6% from 8%, compounded annually, for our 5-year forecast period. We expect the launch of Tata’s Zest to drive Indian sales higher in 2015’s second half. Zest and Bolt are targeted at about 55-60% of the Indian passenger vehicle market and if Tata is able to deliver on the after sales and marketing, then we expect market share gains in the passenger vehicle segment.
The company enjoys a narrow economic moat rating.
To read a detailed analysis on Tata Motors, click here. Our analyst's view on 2015's first-quarter results can be viewed here.
