Jan 16, 2008|
Move over BC, ADů
ůas in "Before Christ" and "After Death". Here comes BN, AN - as in "Before Nano" and "After Nano". The way this wonder car from the stable of Tata Motors is expected to change the dynamics of the Indian car market necessitates the industry's performance and strategies to be divided into these two periods - BN and AN.
As we had mentioned in a previous article of the top 5 events that could shape 2008, the Tata's 1 lakh wonder has indeed gone beyond with the expectation of shaping the auto industry for some years to come. Over the past few years, the Tata Group has developed a knack for grabbing headlines, mostly for their ambitious overseas acquisitions. If all goes well, the Nano will hit the roads by the end of 2008. Thus, while India's prowess in the software sector is now well acknowledged, the success of this launch will possible pave the way for India's recognition as a top notch manufacturing hub known not only for its cost advantage but also for its quality. If this were not enough, the company is believed to be one of the frontrunners for the ownership of Ford's iconic brands 'Jaguar' and 'Land Rover'. Clearly, there can't be a better variety in the kitty of any automotive company.
As a leading American newspaper reports, "Few products designed and made in India have been awaited as eagerly and with as much apprehension as the Nano. A car for Rs 1-lakh (US$ 2,500) was the dream of four years for one man, Tata Motors Chairman Ratan Tata, who saw the peril behind a family of four riding on a two-wheeler and the need to offer them a car that would be much safer for travel, yet affordable. Between the dream and reality was the challenge of putting on sale a car for a price no manufacturer in India or abroad was willing to countenance. So the visionary Tata and his flagship company, Tata Motors, deserve great credit for accomplishing what most people considered utopian, and reinforcing the point global automobile majors are now acknowledging: India is a natural home for 'frugal engineering'."
The Tatas have thrown out all the little extras to come up with only the barest essentials of a car. At 625-cc, it has one windscreen wiper, no power steering, no power windows, no air-conditioner, and will give about 20 km to a liter. But is the Indian consumer complaining? No! This is because the Nano has been marketed as a four-wheel vehicle alternative to the motorcycle, which is in fact one of the most dangerous vehicles to drive on Indian roads given the driving skills and attitudes of those behind the four-wheels (we're counting the Blue Lines and trucks here!).
Well, we are still living in 'BN' as the real test for Tata Motors will be to successfully get the Nano on road, with least amount of hiccups (as was faced during the launch of Indica). The company's success in doing so will well and truly signal the onset of AN. During this period, there might be companies vying to launch a car which could be priced at the same level as Nano or even slightly lower! But the Nano will still be remembered as the 'first' car that changed the face of Indian auto engineering. And it can well lead the way for a host of 'low-cost' and quality options in places India and Indians want them more - housing, public transportation and power.
As far as Tata Motors' stock is concerned, while Nano could well make a big difference to its fortunes in the passenger cars space, it is the mega bucks that the company might have to shell out for its likely purchase of the iconic Ford brands 'Jaguar' and 'Land Rover' that is worrying us. It should be noted that the company is in the midst of a huge capex plan of its own and any more debt will only weaken its balance sheet further. Thus, at the current juncture, we advise investors to exercise caution on the stock. The Nano though has our thumbs up from whatever we have seen of it so far.
| Our view on Tata Motors' stock |
More Views on News
Aug 14, 2017
Tata Motors Ltd disappoints again for both India and JLR business. Management commentary indicates a slow year ahead.
Aug 2, 2017
GST realted cost impacts Margins, Management expects good year ahead.
Aug 1, 2017
Good Recovery in the Scooters market, expects pick up in exports too.
Aug 1, 2017
New Export Markets picking up, Management expects good recovery in domestic Three wheeler market.
Jul 6, 2017
Ends the year on a Flat note. Expects good recovery in the exports market.
More Views on News
Aug 10, 2017
Don't miss these proxy bets on growing companies or in a few years you will be looking back with regret.
Aug 10, 2017
Bill connects the dots...between money and growth, real money and real resources, gold and cryptocurrencies...and between gold, cryptocurrencies, and time.
Aug 12, 2017
The India VIX is up 36% in the last week. Fear has gone up but is still low by historical standards.
Aug 10, 2017
Bitcoin hits an all-time high, is there more upside left?
Aug 16, 2017
Ensure your financial Independence, and pledge to start the journey towards financial freedom today!
Copyright © Equitymaster Agora Research Private Limited. All rights reserved.
Any act of copying, reproducing or distributing this newsletter whether wholly or in part, for any purpose without the permission of Equitymaster is strictly prohibited and shall be deemed to be copyright infringement. LEGAL DISCLAIMER:
Equitymaster Agora Research Private Limited (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA or Canada, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here
. The performance data quoted represents past performance and does not guarantee future results.SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.
Equitymaster Agora Research Private Limited. 103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India.
Telephone: +91-22-61434055. Fax: +91-22-22028550. Email: firstname.lastname@example.org. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407