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1
GENERAL FACTS
 Company Name : Tata Motors Limited (formerly, TELCO)
 Parent Organisation : Tata Group
 Industry : Autom...
Mission, Vision & Values
3
TATA MOTORS AT A
GLANCE
 Tata Motors Limited is India’s largest automobile company, with
consolidated revenues of INR 2,6...
PEST ANALYSIS
 PEST Analysis is a simple and widely used tool that helps you
analyze the Political, Economic, Socio-Cultu...
POLITICAL FACTORS
Since Tata Motors operates in multiple countries
across Europe, Africa, Asia, the Middle East, and
Austr...
ECONOMIC FACTORS
Operating in numerous countries across the world, Tata Motors
functions with a global economic perspectiv...
SOCIAL FACTORS
There are various socio-cultural factors which affect a company
belonging to automotive industry like TATA ...
TECHNOLOGICAL
FACTORS
 Technological factors and innovations, Research &
development plays a most important role as they ...
Porter’s Five Forces Model
10
Barriers to Entry
 Economies of scale: Companies like Maruti, TATA Motors etc are present in
market from many years and h...
Threat of Substitutes
 For automotive industry, there are only two main substitutes
available i.e. Railways and Airlines....
Bargaining Power of
Suppliers
 To manufacture a vehicle number of inputs is used like steel,
seat covers, technology, and...
Bargaining Power of Buyers
 The bargaining power of buyers is generally low ,because the big
companies dominate the marke...
Industry Rivalry
 Strong
 The market is dominated by a few number of large scale companies
like Maruti Suzuki, Hyundai, ...
SWOT ANALYSIS
 A SWOT analysis (alternatively SWOT matrix) is a structured
planning method used to evaluate the Strengths...
17
RATIO ANALYSIS
 Ratio analysis is quantitative analysis of information contained in a
company's financial statements.
 R...
EBT Margin
 Tata Motors Performance
FY - 2011 FY - 2012 FY - 2013 FY - 2014 FY - 2015
4.66 % 2.46 % 0.39 % -2.99 % -10.95...
Net Profit Margin
 Tata Motors Performance
FY - 2011 FY - 2012 FY - 2013 FY - 2014 FY - 2015
3.84 % 2.28 % 0.67 % 0.97 % ...
Return on Assets(ROA)
 Tata Motors Performance
FY - 2011 FY - 2012 FY - 2013 FY - 2014 FY - 2015
5.23 % 4.05 % 0.90 % 0.9...
Return on Equity(ROE)
 Tata Motors’ Performance
FY - 2011 FY - 2012 FY - 2013 FY - 2014 FY - 2015
9.06 % 6.33 % 1.57 % 1....
Total Assets Turnover
 Tata Motors’ Performance
FY - 2011 FY - 2012 FY - 2013 FY - 2014 FY - 2015
1.35 1.77 1.34 1.01 1.0...
Current Ratio
 Tata Motors’ Performance
FY - 2011 FY - 2012 FY - 2013 FY - 2014 FY - 2015
0.54 0.45 0.40 0.39 0.55
• Comp...
Debt to Equity Ratio
 Tata Motors’ Performance
FY - 2011 FY - 2012 FY - 2013 FY - 2014 FY - 2015
0.73 0.56 0.74 0.75 1.35...
Price to Earnings Ratio(P/E)
 Tata Motors Performance
FY - 2011 FY - 2012 FY - 2013 FY - 2014 FY - 2015
27.62 339.17 1823...
Price to Sales Ratio(P/S)
 Tata Motors’ Performance
FY - 2011 FY - 2012 FY - 2013 FY - 2014 FY - 2015
1.06 7.74 12.34 26....
28
Thank You
- Anmol Agrawal
ERI Student
Birla Institute of Technology, Mesra, Ranchi,
India
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Tata motors : Fundamental & Ratio Analysis

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Comapny's History, PEST Analysis, Porter's Five Forces Analysis, SWOT Analysis and Ratio Analysis.

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Tata motors : Fundamental & Ratio Analysis

  1. 1. 1
  2. 2. GENERAL FACTS  Company Name : Tata Motors Limited (formerly, TELCO)  Parent Organisation : Tata Group  Industry : Automotive  Headquarters : Mumbai, Maharashtra, India  Year of Foundation : 1945  Founder : J.R.D. Tata  Date of IPO : 3rd Jan 2000, NYSE since 2004  IPO Price : Rs. 38.64  Number of Employees : 67,485 (2014-15)  Chairman : Cyrus Pallonji Mistry  Division : Tata Motor Cars  Subsidiaries : Jaguar Land Rover, Tata Daewoo, Tata Hispano 2
  3. 3. Mission, Vision & Values 3
  4. 4. TATA MOTORS AT A GLANCE  Tata Motors Limited is India’s largest automobile company, with consolidated revenues of INR 2,63,695 crores (USD 42.19 billion) in 2014-15.  The company’s manufacturing base in India is spread across Jamshedpur(Jharkhand), Pune(Maharashtra), Lucknow(U.P.), Pantnagar(Uttarakhand), Sanand(Gujarat) and Dharwad(Karnataka).  In 2005, it set up an industrial joint venture with Fiat Group Automobiles at Rajangaon(Maharashtra) to produce both Fiat and Tata cars and Fiat Powertrains.  The company’s dealership, sales, services and spare parts network comprises over 6,000 touch points, across the world.  With over 4,500 engineers, scientists & technicians making pathbreaking innovations at the company’s Engineering Research Centre, established in 1966, have enabled pioneering technologies and products. 4
  5. 5. PEST ANALYSIS  PEST Analysis is a simple and widely used tool that helps you analyze the Political, Economic, Socio-Cultural, and Technological changes in your business environment.  It is useful for four main reasons : 1. It helps you to spot business or personal opportunities, and it gives you advanced warning of significant threats. 2. It reveals the direction of change within your business environment. This helps you shape what you're doing, so that you work with change, rather than against it. 3. It helps you avoid starting projects that are likely to fail, for reasons beyond your control. 4. It can help you break free of unconscious assumptions when you enter a new country, region, or market; because it helps you develop an objective view of this new environment. 5
  6. 6. POLITICAL FACTORS Since Tata Motors operates in multiple countries across Europe, Africa, Asia, the Middle East, and Australia, it needs to pay close attention on following political factors in different regions : ◦ Political Climate or Stability ◦ Laws governing commerce, trade, growth, and investment ◦ Labour Laws ◦ Tax policy ◦ Environmental Rules & Regulations ◦ Pricing Regulations ◦ Local Markets and Economies 6
  7. 7. ECONOMIC FACTORS Operating in numerous countries across the world, Tata Motors functions with a global economic perspective while focusing on each individual market. Because Tata is in a rapid growth period, expanding or forming a joint venture in over five countries world-wide since 2004, a global approach enables Tata Motors to adapt and learn from the many different regions within the whole automotive industry. Major economic factors are :  Government taxes on manufacturers.  Inflation Rate  Population figures  Buying capacity of people  Prices of external resources (Ex: price of Steel will increase the price of vehicle)  Level of economic activities  Interest Rates 7
  8. 8. SOCIAL FACTORS There are various socio-cultural factors which affect a company belonging to automotive industry like TATA MOTORS in the market down to consumers. The factors are :  Different segments of Population  Cultural Differences  Social Responsibility  Influence of Consumer Movement  People concerns over the price, mileage, brand of the car, design and style, after sales service when purchasing a vehicle.  Also, depends on what other people think about their vehicle  Satisfaction of different age groups  Space and Safety  Focus on Corporate Customers 8
  9. 9. TECHNOLOGICAL FACTORS  Technological factors and innovations, Research & development plays a most important role as they improve standards of driving.  Fuel consumption is one of a major problem at the moment, hybrid engines has developed to reduce fuel consumption.  One of a major requirement of the customer is safety. Seat belts, air bags which protect passengers at a collision, ABS brakes to stop the vehicle in short distance even in icy surfaces.  By investing for Research and development and innovating new technologies can gain patented and boost sales.  Technological development is support the driver to control the vehicle more comfortable and easier. Ex: Auto gear, auto parking, Navigation system. 9
  10. 10. Porter’s Five Forces Model 10
  11. 11. Barriers to Entry  Economies of scale: Companies like Maruti, TATA Motors etc are present in market from many years and had achieved the optimum level of production through which these companies are enjoying the economies of scale. But for a new player it will not be easy to get these benefits due to high price competition from exiting players.  Demand side benefit of scale: Company like Bajaj, TATA etc have the large number of customer base and had build the trust in the product. So new players will find it difficult to a make place among the customer.  Customer switching cost: A customer after buying a vehicle once usually do not replace it before two or three years so the switching cost in this industry is high. It will be a barrier for new player.  Capital requirements: Capitals required to start an automobile company is very high. High land, machinery and human resource requirement also impose a big problem.  Distribution channels: In any industry to capture the huge market you should have a big distribution network not only for sales of vehicles but also for the services. Like Maruti due to the oldest company in India have the advantage over the competitors. Even existing players are not able to overcome this who are trying from so many years so a very big barrier for new entrance. 11
  12. 12. Threat of Substitutes  For automotive industry, there are only two main substitutes available i.e. Railways and Airlines.  But both of these will not be substitutes for every customer and in every situation. Like for a short journey airlines will not be substitutes. And journey to a place where railway can't reach in this position railway will not be substitute. But these can be threat in near future as airlines industry trying their hard best to cheap their fair and start as much as local airlines.  However, within the automobile industry lot of completion and substitutes are available like for two wheels any car can be substitute after the launch of Nano the price factor also removed and owned car or car on rent are the substitute for each other. This is great advantage to TATA as now two wheeler customer can also go for car which mean new segment of customer. 12
  13. 13. Bargaining Power of Suppliers  To manufacture a vehicle number of inputs is used like steel, seat covers, technology, and tyre etc. Input which add value to the vehicle supplier of those inputs are always have high bargaining power like tyres of MRF will add value to the final product so company using the MRF tyre can't change the supplier easily due to high switch cost.  Steel, which is the most important raw material of the industry and in India, the demand of steel is higher than supply. So, most of the steel is imported from abroad, hence in this case also the bargaining power of suppliers is high.  However, inputs like Seat cover, plastics etc can be easily switched with nil cost of switching. So in this case, bargaining power of supplier is low. 13
  14. 14. Bargaining Power of Buyers  The bargaining power of buyers is generally low ,because the big companies dominate the market with their quality and reputation of so many years.  However, when a automobile company goes for backward integration in that case buyer have the high bargaining power. Like Tata which have its own steel plants so can face the problem of shortage of raw material. 14
  15. 15. Industry Rivalry  Strong  The market is dominated by a few number of large scale companies like Maruti Suzuki, Hyundai, Tata Motors comprising about 60% market share.  Rivalry is somewhat reduced due to a degree of differentiation, luxury and budget.  Since, industry competitiveness is high, Tata Motors will have to differentiate its products and have clear position in market. 15
  16. 16. SWOT ANALYSIS  A SWOT analysis (alternatively SWOT matrix) is a structured planning method used to evaluate the Strengths, Weaknesses, Opportunities and Threats involved in a project or in a business venture. 16
  17. 17. 17
  18. 18. RATIO ANALYSIS  Ratio analysis is quantitative analysis of information contained in a company's financial statements.  Ratio analysis is used to evaluate various aspects of a company’s operating and financial performance such as its efficiency, liquidity, profitability and solvency.  Ratios are also compared across different companies in the same sector to see how they stack up, and to get an idea of comparative valuations.  In our analysis, we will evaluate five aspects of the company and its competitors : 1. Operating Performance(EBT margin, Net Profit margin, Return on Assets, Return on Equity) 2. Activity Levels(Total Asset turnover) 3. Liquidity Position (Current Ratio) 4. Leverage (Debt to Equity) 5. Stock Valuation Multiples ( Price to Earnings Ratio, Price to Sales Ratio) 18
  19. 19. EBT Margin  Tata Motors Performance FY - 2011 FY - 2012 FY - 2013 FY - 2014 FY - 2015 4.66 % 2.46 % 0.39 % -2.99 % -10.95 % • Competitors Performance in FY-2015 Tata Motors Ford GM Mahindra -10.95 % 3.69 % 4.79 % 7.86 % • EBT margin shows company’s earnings before tax as a percentage of net sales (revenues). • Tata Motors is performing poorly in current financial year as compared to previous years. Negative EBIT margin indicates that the company isn’t selling enough to cover its fixed costs. It’s only tolerable in a early stage growth company or a Startup. • As compared to its competitors, it is at the bottom. Mahindra leading in the market. 19
  20. 20. Net Profit Margin  Tata Motors Performance FY - 2011 FY - 2012 FY - 2013 FY - 2014 FY - 2015 3.84 % 2.28 % 0.67 % 0.97 % -13.05 % • Competitors Performance in FY-2015 Tata Motors Ford GM Mahindra -13.05 % 2.97 % 3.00 % 7.74 % • The net profit margin takes all costs associated with the firm’s continuing operations into account, and so tells us how much it is able to keep as profit for each dollar of sales it makes. Usually, higher is better. • Tata Motors net profit margin has decreased drastically over the years. It has gone negative in FY-2015,which indicates cost of production exceeds net sales. • However, in the market Mahindra is doing outstanding as compared to everyone. 20
  21. 21. Return on Assets(ROA)  Tata Motors Performance FY - 2011 FY - 2012 FY - 2013 FY - 2014 FY - 2015 5.23 % 4.05 % 0.90 % 0.99 % -13.57 % • Competitors Performance in FY-2015 Tata Motors Ford GM Mahindra -13.57 % 1.73 % 2.49 % 5.67 % • The return on assets shows the percentage of how profitable a company's assets are in generating revenue. This ratio tells us how much profit a company is able to generate for each dollar of assets invested. • Tata Motors’ ROA is decreasing year by year and has fallen drastically in recent financial year. Negative ROA shows that company is investing a high amount of capital into its production while simultaneously receiving little income. • Mahindra & Mahindra leading the market strongly, with a much better position. 21
  22. 22. Return on Equity(ROE)  Tata Motors’ Performance FY - 2011 FY - 2012 FY - 2013 FY - 2014 FY - 2015 9.06 % 6.33 % 1.57 % 1.74 % -31.93 % • Competitors’ Performance in FY-2015 Tata Motors Ford GM Mahindra -31.93 % 13.92 % 12.29 % 21.57 % • Return on equity measures the rate of return for ownership interest of common stock owners. It measures the efficiency of a firm at generating profits from each unit of shareholder equity. • High ROEs can be caused by the firm taking on excessive leverage, which can prove disastrous for the firm’s shareholders in the long run. Hence, high ROE is not always better. • Tata Motors recent financial year ROE shows that its shareholders are loosing, instead to gaining value. Investors may avoid placing their money in , but they may also overlook, as the company is well- positioned for long-term growth. • M&M high ROE might be due to excessive leverage. 22
  23. 23. Total Assets Turnover  Tata Motors’ Performance FY - 2011 FY - 2012 FY - 2013 FY - 2014 FY - 2015 1.35 1.77 1.34 1.01 1.039 • Competitors’ Performance in FY-2015 Tata Motors Ford GM Mahindra 1.039 0.66 0.84 0.9 • The asset turnover ratio tells us how many dollars of sales a company is able to generate for each dollar of assets. • A high asset turnover is an indicator of good performance provided the company’s assets are not in a state of advanced depreciation. • Tata Motors has a very good asset turnover ratio over its competitors. 23
  24. 24. Current Ratio  Tata Motors’ Performance FY - 2011 FY - 2012 FY - 2013 FY - 2014 FY - 2015 0.54 0.45 0.40 0.39 0.55 • Competitors’ Performance in FY-2015 Tata Motors Ford GM Mahindra 0.55 3.03 1.22 1.44 • The current ratio is a financial ratio that measures whether or not a firm has enough resources to pay its debts over the next 12 months. It compares a firm's current assets to its current liabilities. • A current ratio of 2 or above is usually considered safe. • Tata Motors is in a poor condition to pay back its debts, while Ford is in a very safe situation as compared to its competitors. 24
  25. 25. Debt to Equity Ratio  Tata Motors’ Performance FY - 2011 FY - 2012 FY - 2013 FY - 2014 FY - 2015 0.73 0.56 0.74 0.75 1.35 • Competitors’ Performance in FY-2015 Tata Motors Ford GM Mahindra 1.35 4.18 1.11 1.09 • The debt-to-equity ratio (D/E) is a financial ratio indicating the relative proportion of shareholders' equity and debt used to finance a company's assets. • The most widely used measure of a company’s leverage, debt to equity ratios greater than 1 indicate the company may be overleveraged. • Tata Motors having a D/E ratio greater than 1, indicates the company is stretching itself financially. However, Ford as compared to its competitors is most overleveraged. 25
  26. 26. Price to Earnings Ratio(P/E)  Tata Motors Performance FY - 2011 FY - 2012 FY - 2013 FY - 2014 FY - 2015 27.62 339.17 1823.13 2739.68 -112.21 • Competitors Performance in FY-2015 Tata Motors Ford GM Mahindra -112.21 14.88 11.12 22.01 • P/E tells us how many years a company will need to earn back what investors are currently paying for the stock. • It is generally high for companies considered to have huge growth potential, and low for mature (‘unexciting’) companies. • Tata Motors, being a very old company has reached a saturation stage in FY-2104 and not able to make earnings, indicating a very low growth potential. • Mahindra & Mahindra on the other hand, has been able to evolve continuously with the market and shows a huge potential to grow in FY- 2015. • However, Tata Motors has done immensely great in previous years, due 26
  27. 27. Price to Sales Ratio(P/S)  Tata Motors’ Performance FY - 2011 FY - 2012 FY - 2013 FY - 2014 FY - 2015 1.06 7.74 12.34 26.74 14.64 • Competitors’ Performance in FY-2015 Tata Motors Ford GM Mahindra 14.64 0.387 0.329 0.176 • The price-to-sales (per share) ratio is more stable than the price-to- earnings ratio. • is • It is preferred for the relative valuation of companies which are still growing and do not have positive earnings. • As Tata Motors, has negative earnings in the FY-2015, it has a very high price to sales ratio as compared to its competitors ,which have positive earnings. • However, the P/S ratio has decreased from FY-2014 to FY-2015. 27
  28. 28. 28 Thank You - Anmol Agrawal ERI Student Birla Institute of Technology, Mesra, Ranchi, India

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