Here’s How A Higher Domestic Market Share Can Impact Tata Motors’ Revenues

by Trefis Team
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Tata Motors  (NYSE:TTM) has had a good 2017 in the domestic market. The company’s share in the car market in India increased by 50 basis points from 4.8% in 2016 to 5.3% in 2017, on the back of new launches which were well received by the market. Tata Motors is now planning more product launches in the next 2-3 years to target 95% of the passenger vehicle market in India.  Currently, the company’s models cover around 67% of the market.  Competing in every segment of the passenger vehicle market can lead to a greater market share in India for Tata Motors, driving revenues in the region.

Continuing on its current momentum and with new launches, it is possible for Tata Motors to increase its market share in India by 50 bps every year for the next three years. In this scenario, domestic revenues can increase by nearly $1 billion by 2020.

You can click here to access these charts and modify the market share to analyze its impact on the revenues.

However, this $1 billion increase in revenues does not impact Tata Motors’ total revenues and consequently its valuation significantly. Jaguar Land Rover is the most significant division for Tata Motors and according to our estimates, this division contributes nearly 95% of the company’s valuation. A $1 billion increase in revenues of the domestic market will lead to a less than 2% increase in the company’s revenues by 2020.

While Tata Motors is making in-roads in the domestic market and the company might reach a market share of around 14.5% enjoyed by it in 2015, this increase will not make any significant impact on the company’s valuation.

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