Can Tata Motors Stock Grow After A Slowdown Warning?

by Trefis Team
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Yes, as per Trefis estimates, Tata Motors‘ (NYSE: TTM) fair share price is $14, slightly higher than the current price of $13 in spite of Tata Motors’ management warning to investors of an expected impact due to the general economic slowdown. Tata Motors is one of India’s largest Original Equipment Manufacturers (OEM). The company manufactures largely under the following brands: Tata, Jaguar, and Land Rover. The company manufactures both commercial and passenger vehicles. The vehicles are sold across the globe.

In this note, we discuss our stock price valuation for Tata Motors. You can look at our interactive dashboard analysis ~ Tata Motors Valuation: Cheap or Expensive? ~ for more details, and also modify our forecasts for the company’s key metrics to understand how changes impact the company’s stock price.

#1. Estimating Tata Motors’ Revenues:

  • Total Revenue increased from $41 billion in 2017 to $43.6 billion in 2019 and is expected to increase by 1.4% to $44.2 billion in 2020.
  • A separate interactive dashboard analysis ‘Tata Motors’ Revenues – How Does Tata Motors Make Money?’, details our forecast for FY 2020 and 2021.

#2. Deriving Sales Per Share:

  • Sales per share rose from $60.32 in 2017 to $64.25 in 2019, and we estimate it to be $65.13 in 2020.
  • The rise in Sales per share for 2020 can be attributed solely to an increase in Total Revenue as the shares outstanding are expected remain flat.

#3. Estimating Tata Motors’ Share Price:

Our Price Estimate of $14 for Tata Motors’ Stock is based on our Detailed Valuation Model for Tata Motors and implies a 0.21x P/S Multiple on expected 2020 Sales per Share of $65.13. Our interactive dashboard captures how Tata Motors compares with its competitors Toyota Motors and Honda Motors in terms of Revenue and P/E multiple.

 

See all Trefis Price Estimates and Download Trefis Data here

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