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SYNOPSIS

Tata Motors Limited is India's largest automobile company, leader in commercial vehicles in each segment, and among the top three in passenger vehicles with winning products in the compact, midsize car and utility vehicle segments.

During the quarter ended, the robust growth of Net Profit is increased by 136.36% to Rs. 62340.00 million.

Tata Motors Ltd has recommended a dividend of Rs. 4/- per Ordinary share and Rs. 4.10 per 'A' Ordinary share both of face value of Rs. 2/- each.

Tata Motors' Dharwad plant for small commercial vehicles is now operational and has begun to produce the Tata ACE Zip and the Tata Magic IRIS.

Tata Motors has entered into an agreement with Apex Greatest Industrial Co Ltd. (AGI), Myanmar, for the distribution of Tata Motors' commercial vehicles and passenger cars in Myanmar.

Net Sales and PAT of the company are expected to grow at a CAGR of 23% and 31% over 2011 to 2014E respectively.

Years Net sales (Rs.mn)

EBITDA (Rs.mn)

Net Profit (Rs.mn) EPS P/E

FY 12 1656544.90 229730.10 135165.00 42.59 5.80

FY 13E 1987853.88 277432.88 172427.85 54.33 4.55

FY 14E 2266153.42 319303.45 214738.49 64.65 3.82

Stock Data:

Sector: Automobile

Face Value Rs. 2.00

52 wk. High/Low (Rs.) 320.60/137.65

Volume (2 wk. Avg.) 2051000.00

BSE Code 500570

Market Cap (Rs in mn) 783916.25

Share Holding Pattern

1 Year Comparative Graph

TATA MOTORS LTD BSE SENSEX

C.M.P: Rs. 247.00 Target Price: Rs. 279.00 Date: June 22nd 2012 BUY

Tata Motors Ltd Result Update: Q4 FY 12

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Peer Group Comparison

Name of the company CMP(Rs.) Market Cap. (Rs.Mn.) EPS(Rs.) P/E(x) P/Bv(x) Dividend (%)

Tata motors 247.00 783916.25 42.59 5.80 2.37 200.00

BEML Ltd 378.45 15760.40 13.75 27.52 0.74 100.00

ABG Shipyard Ltd 379.05 19301.90 35.41 10.70 1.56 40.00

TRF Ltd 279.20 3072.40 14.16 19.72 1.67 20.00

Investment Highlights

Q4 FY11 Results Update

During the quarter the company disclosed a consolidated profit after tax of Rs.

62340.00 million for the quarter ended March 31, 2012 as against of Rs.26375.20

million in the same quarter last year, an increase of 136.36%. It has reported Net

sales are increased by 44.27% to Rs. 509079.00 million for the quarter ended

March 31, 2012 as against Rs 352870.60 million in the same quarter last year.

Total income grew by 44.14% to Rs 510664.80 million from Rs.354275.20 million

in the same quarter last year. Company EPS is stood at Rs.19.64 for the quarter

ended March 2012.

Quarterly Results - Consolidated (Rs in mn)

As At Mar-12 Mar-11 %change

Net sales 509079.00 352870.60 44.27

PAT 62340.00 26375.20 136.36

Basic EPS 19.64 41.36 (52.51)

Note: The effect on EPS is due to the Stock Split from Rs. 10/- to Rs. 2/-.

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� Break up of Expenditure

� Recommended a dividend

Tata Motors Ltd has recommended a dividend of Rs. 4/- per Ordinary share (200%)

and Rs. 4.10 per 'A' Ordinary share (205%), both of face value of Rs. 2/- each (post

split) for FY 2011-12 [Rs. 20/- per Ordinary share (200%) and Rs. 20.50/- per 'A'

Ordinary share (205%), both of face value of Rs. 10/- each for FY 2010-11].

� Allotment of Ordinary Shares

Tata Motors Ltd has allotted 1,60,95,391 Ordinary Shares of Rs. 2/- each

(comprising of 1,52,56,295 Underlying Ordinary Shares of Rs. 2/- each

representing 30,51,259 ADSs and 8,39,096 Ordinary Shares of Rs. 2/- each, both

arising out of conversion of 422 Notes of US$100,000 each) be and are hereby

allotted at a premium of Rs. 119.34/-.

Post the above allotment, the share capital of the Company is as below:

2707731241 Ordinary Shares of Rs. 2 each

481959190 ‘A’ Ordinary Shares of Rs. 2 each.

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� Tata Motors plant at Dharwad comes on stream

Tata Motors' Dharwad plant for small commercial vehicles is now operational and

has begun to produce the Tata ACE Zip and the Tata Magic IRIS. The company has

commenced manufacturing operations in Dharwad and further expands our

operations in the country. This move is integral to Tata Motors' dominant presence

in the Commercial Vehicles market."

Established with an investment of over Rs. 900 crores, the plant spans across an

area of 405 acres. The plant has been constructed as per the norms specified by

Indian Green Building Council (IGBC). The plant has been equipped with state-of-

the-art equipment following lean manufacturing principles. It has built-in

flexibilities to assemble large numbers and different variants in mixed mode

production. The plant has been recommended for ISO 14001, Environment

Management System Standard.

� Tata Motors enters into distribution agreement in Myanmar

Tata Motors has entered into an agreement with Apex Greatest Industrial Co Ltd.

(AGI), Myanmar, for the distribution of Tata Motors' commercial vehicles and

passenger cars in Myanmar. The purchase & sale agreement was signed at

Myanmar's capital city of Nay Pyi Taw, by Mr. R. T. Wasan, Head - International

Business (Commercial Vehicles) and Mr. Johnny Oommen, Head - International

Business (Passenger Vehicles), on behalf of Tata Motors, and the Chairman of AGI

Myanmar, Mr. U Kyi Thein.

Company Profile

Tata Motors Limited is India's largest automobile company; it is the leader in

commercial vehicles in each segment, and among the top three in passenger vehicles

with winning products in the compact, midsize car and utility vehicle segments. The

company is the world's fourth largest truck manufacturer, and the world's second

largest bus manufacturer.

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Established in 1945, Tata Motors' presence indeed cuts across the length and breadth

of India. Over 4 million Tata vehicles ply on Indian roads, since the first rolled out in

1954. The company's manufacturing base in India is spread across Jamshedpur

(Jharkhand), Pune (Maharashtra), Lucknow (Uttar Pradesh), Pantnagar (Uttarakhand)

and Dharwad (Karnataka). Following a strategic alliance with Fiat in 2005, it has set

up an industrial joint venture with Fiat Group Automobiles at Ranjangaon

(Maharashtra) to produce both Fiat and Tata cars and Fiat power trains. The

company is establishing a new plant at Sanand (Gujarat). The company's dealership,

sales, services and spare parts network comprises over 3500 touch points; Tata

Motors also distributes and markets Fiat branded cars in India.

Tata Motors is also expanding its international footprint, established through exports

since 1961. The company's commercial and passenger vehicles are already being

marketed in several countries in Europe, Africa, the Middle East, South East Asia,

South Asia and South America. It has franchisee/joint venture assembly operations

in Kenya, Bangladesh, Ukraine, Russia, Senegal and South Africa.

With over 3,000 engineers and scientists, the company's Engineering Research

Centre, established in 1966, has enabled pioneering technologies and products. The

company today has R&D centres in Pune, Jamshedpur, Lucknow, Dharwad in India,

and in South Korea, Spain, and the UK. It was Tata Motors, which developed the first

indigenously developed Light Commercial Vehicle, India's first Sports Utility Vehicle

and, in 1998, the Tata Indica, India's first fully indigenous passenger car. Within two

years of launch, Tata Indica became India's largest selling car in its segment. In 2005,

Tata Motors created a new segment by launching the Tata Ace, India's first

indigenously developed mini-truck.

In January 2008, Tata Motors unveiled its People's Car, the Tata Nano, which India

and the world have been looking forward to. The Tata Nano has been subsequently

launched, as planned, in India in March 2009. A development, which signifies a first

for the global automobile industry, the Nano brings the comfort and safety of a car

within the reach of thousands of families. The standard version has been priced at

Rs.100,000 (excluding VAT and transportation cost).

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In May 2009, Tata Motors introduced ushered in a new era in the Indian automobile

industry, in keeping with its pioneering tradition, by unveiling its new range of world

standard trucks called Prima. In their power, speed, carrying capacity, operating

economy and trims, they will introduce new benchmarks in India and match the best

in the world in performance at a lower life-cycle cost.

Through its subsidiaries, the company is engaged in engineering and automotive

solutions, construction equipment manufacturing, automotive vehicle components

manufacturing and supply chain activities, machine tools and factory automation

solutions, high-precision tooling and plastic and electronic components for

automotive and computer applications, and automotive retailing and service

operations.

Product range of the company includes:

Passenger Cars:

Indica Vista, Indica V2, indica V2 Turbo, Indica V2 Xeta, Indica V2 Dicor.

Indigo XL, Indigo, Indigo Marina Indigo CS.

Nano.

Fiat Cars.

Tata Cars

Jaguar

Land Rover

Utility Vehicles:

Safari Dicor.

Sumo Grande.

Sumo.

Xenon XT.

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Commercial Vehicles:

Medium & Heavy Comm. Vehicles, Tata Novus.

Intermediate Comm. Vehicles.

Light Commercial Vehicles, TL 4×4,

Small Commercial Vehicles. Commercial Passenger Carriers:

Buses.

Winger.

Magic Defence Vehicles

Logistics

Tactical

Armored

Buses

Subsidiaries of the company:

� Jaguar Land Rover.

� Tata Technologies Ltd. (TTL) and its subsidiaries.

� Telco Construction Equipment Co. Ltd. (Telcon).

� HV Axles Ltd. (HVAL).

� HV Transmissions Ltd. (HVTL).

� TAL Manufacturing Solutions Ltd. (TAL).

� Sheba Properties Ltd. (Sheba).

� Concorde Motors (India) Ltd. (Concorde).

� Tata Daewoo Commercial Vehicle Company Ltd (TDWCV).

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� Tata Motors Insurance Broking & Advisory Services Ltd (TMIBASL).

� Tata Motors European Technical Centre plc.

� Tata Motors Finance Limited.

� Tata Motors Thailand.

� Tata Motors (SA) Proprietary Ltd (TMSA).

� TML Distribution Company Ltd (TDCL).

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Financial Results

12 Months Ended Profit & Loss Account (Consolidated)

Value(Rs.in.mn) FY11 FY12 FY13E FY14E

Description 12m 12m 12m 12m

Net Sales 1231333.00 1656544.90 1987853.88 2266153.42

Other Income 896.10 6617.70 4102.97 4308.12

Total Income 1232229.10 1663162.60 1991956.85 2270461.55

Expenditure -1063158.20 -1433432.50 -1714523.97 -1951158.10

Operating Profit 169070.90 229730.10 277432.88 319303.45

Interest -20454.20 -29822.20 -28331.09 -29747.64

Gross profit 148616.70 199907.90 249101.79 289555.80

Depreciation -46555.10 -56253.80 -63004.26 -69304.68

Exceptional Items 2310.10 -8315.40 -9313.25 -9778.91

Profit Before Tax 104371.70 135338.70 176784.29 210472.21

Tax -12163.80 400.40 -3712.47 -4630.39

Profit After Tax 92207.90 135739.10 173071.82 205841.82

Minority Interest -485.20 -823.30 -905.63 -941.86

Share of Profit & Loss of Asso

1013.50 249.20 261.66 274.74

Net Profit 92736.20 135165.00 172427.85 205174.71

Equity capital 6377.10 6347.50 6347.50 6347.50

Reserves 183891.30 324222.80 497294.62 703136.44

Face value 10.00 2.00 2.00 2.00

EPS 145.42 42.59 54.33 64.65

Note: The effect on EPS is due to the Stock Split from Rs. 10/- to Rs. 2/-.

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Quarterly Ended Profit & Loss Account (Consolidated)

Value(Rs.in.mn) 30-Sep-11 31-Dec-11 31-Mar-12 30-Jun-12E

Description 3m 3m 3m 3m

Net sales 361975.40 452602.50 509079.00 488715.84

Other income 608.40 240.30 1585.80 1268.64

Total Income 362583.80 452842.80 510664.80 489984.48

Expenditure -316936.00 -384332.70 -441634.20 -419318.19

Operating profit 45647.80 68510.10 69030.60 70666.29

Interest -5250.50 -5769.40 -7720.90 -8570.20

Gross profit 40397.30 62740.70 61309.70 62096.09

Depreciation -13308.20 -16159.40 -15354.00 -13511.52

Exceptional Items -4389.60 -1643.40 -1712.50 -685.00

Profit Before Tax 22699.50 44937.90 44243.20 48584.57

Tax -3630.40 -10710.90 18260.80 -7773.53

Profit After Tax 19069.10 34227.00 62504.00 40811.04

Minority Interest -335.30 -209.60 -239.30 -52.50

Share of Profit & Loss of Asso 39.50 38.10 75.30 79.07

Net Profit 18773.30 34055.50 62340.00 40837.60

Equity capital 6347.50 6347.5 6347.50 6347.50

Face value 2.00 2.00 2.00 2.00

EPS 5.92 10.73 19.64 12.87

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Key Ratio

Particulars FY11 FY12 FY13E FY14E

No. of Shares(in mn) 637.71 3173.75 3173.75 3173.75

EBITDA Margin (%) 13.73% 13.87% 13.96% 14.09%

PBT Margin (%) 8.48% 8.17% 8.89% 9.29%

PAT Margin (%) 7.49% 8.19% 8.71% 9.08%

P/E Ratio (x) 1.70 5.80 4.55 3.82

ROE (%) 48.46% 41.06% 34.36% 29.01%

ROCE (%) 41.61% 42.38% 39.35% 35.68%

Debt Equity Ratio 1.72 1.04 0.72 0.54

EV/EBITDA (x) 0.93 3.41 2.83 2.46

Book Value (Rs.) 298.36 104.16 158.69 223.55

P/BV 0.83 2.37 1.56 1.10

Charts:

• Net sales & PAT

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• P/E Ratio (x)

• Debt Equity Ratio

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• EV/EBITDA(X)

• P/BV (X)

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Outlook and Conclusion

At the current market price of Rs.247.00, the stock is trading at 4.55 x

FY13E and 3.82 x FY14E respectively.

Earning per share (EPS) of the company for the earnings for FY13E and

FY14E is seen at Rs.54.33 and Rs.64.65 respectively.

Net Sales and PAT of the company are expected to grow at a CAGR of 23%

and 31% over 2011 to 2014E respectively.

On the basis of EV/EBITDA, the stock trades at 2.83 x for FY13E and 2.46 x

for FY14E.

Price to Book Value of the stock is expected to be at 1.56 x and 1.10 x

respectively for FY13E and FY14E.

We expect that the company will keep its growth story in the coming

quarters also. We recommend ‘BUY’ in this particular scrip with a target

price of Rs.279.00 for Medium to Long term investment.

Industry Overview

The automobile sector of any country reflects the health of its economy. By this virtue,

the Indian economy is very much in a good shape as the country's automobile

industry has marked impressive growth in the last fiscal. The overall Indian

automobile industry grew by 12.12 per cent in 2011-12 by selling 17.3 million units,

majorly driven by demand for two-wheelers and light trucks. Further, the sector

witnessed sales growth of 12.46 per cent for the period between April 2011 and

February 2012.

The industry has undergone numerous developments and investments recently that

have substantially impacted the market dynamics.

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Market Dynamics

As per the 2010-11 data released by the Society of Indian Automobile Manufacturers

(SIAM), domestic vehicle market is dominated by two-wheelers segment with 76 per

cent of the pie. Passenger vehicles, commercial vehicles and three-wheelers account

for 16.25 per cent, 4.36 per cent and 3.39 per cent of the market, respectively.

Hero MotorCorp rules the two-wheeler market with 56 per cent of the share. Maruti

Suzuki holds its leader position in passenger vehicle segment with 38 per cent of the

pie, while Hyundai follows with 15 per cent of the share.

For passenger vehicle segment, the share of the entry-compact segment (that consists

of cars like the Tata Nano, Maruti Alto, Ford Figo, Maruti WagonR, Hyundai's Santro,

i10 and Eon and GM's Beat) stood at 47 per cent in 2011, while premium compacts

(like Maruti Swift, Hyundai i20 and VW Polo) maintained their share of 11 per cent.

Sports-utility vehicle (SUV) segment registered the fastest growth rate (32 per cent) to

capture over 18 per cent of the market share, while Sedans had 19 per cent of the pie.

Key Statistics

• The cumulative production for April-March 2012 registered a growth of 13.83

per cent over April-March 2011, manufacturing 20,366,432 vehicles during the

period

• While Passenger vehicle segment grew at 4.66 per cent during April-March

2012, overall commercial vehicle segment registered an expansion of 18.20 per

cent year-on-year (y-o-y)

• Two Wheelers sales registered a growth of 14.16 per cent during April-March

2012 wherein Mopeds, Motorcycles and Scooters grew by 11.39 per cent, 12.01

per cent and 24.55 per cent, respectively

• The industry exported 2,910,055 units registering a growth of 25.44 per cent in

April-March 2012. Automobile exports registered a growth of 17.81 per cent in

March 2012 as against March 2011

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Major Developments & Investment

• World's largest two-wheeler manufacturer Hero MotoCorp has inked a

technology-sharing deal with US motorcycle firm Erik Buell Racing (EBR)

wherein Hero would buy technology from EBR without sharing profits or

ownership. EBR is already working on some of Hero MotoCorp's products to

customize them according to the Indian markets. New models of bikes and

scooters are likely to get launched by 2013

• The Stuttgart-based luxury car maker Mercedes Benz intends to invest Rs 350

crore (US$ 67.97 million) by 2014 in its facility near Pune and launch about five

compact premium cars in India by then. The company sees great growth

prospects in India and hence plans to strengthen its dealership network and

ramp-up its production capacities to harness the opportunity

• Tata Motors, the country's largest automobile producer, has announced that it

will infuse Rs 800 crore - Rs 1000 crore (US$ 155.2 - 194 million) over 2012-

2015 to build a plant in Dharwar, Karnataka. The facility that would be

exclusively dedicated to manufacture the Tata Ace Zip and Magic Iris will have

an annual capacity of 90,000 units. It is anticipated that the plant would reach

its full capacity by the end of fiscal 2012-13

• Nissan plans to bring its premium car brand Infiniti in the domestic market as

it intends to expand its luxury car basket in India. Infiniti's entry will intensify

the competition in Indian luxury car space as there are so many brands vying

for substantial market share. Nissan plans to assemble the car in India instead

of importing it a completely-built unit (CBU)

• Escorts' agri-machinery arm won a one-year rate contract from the Ministry of

Commerce and Industry for supplying tractors to Central and State-level

agencies. The contract would enable the Faridabad-based firm to supply

tractors on pre-approved prices directly without entering any tendering process

Government Initiatives

In order to enforce compliance and the Energy Conservation Act, the Government has

recently given its nod to fuel mileage standards and labelling for new cars. Keeping

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consumer interest in mind, these norms would mandate auto makers to put

Government certified fuel efficiency labels on each car they sell and improve efficiency

of their products. While the labels will become compulsory soon, the standards will be

introduced by 2015, giving manufacturers time to improve upon their technology.

SIAM is working on a voluntary recall policy that is in favour of auto manufacturers.

The soon-to-be-unveiled policy would make producers proactive rather than being

reactive for the recall activity.

On a similar note, the Indian Government is in the process of constituting a National

Automotive Board (NAB) which would become a formal set-up to look into the issue of

recall of vehicles and hence improve manufacturing standards. The prospective body,

to oversee technical and safety aspects of vehicles, will have representatives from all

the nodal ministries and automotive bodies such as the Automotive Research

Association of India (ARAI).

Road Ahead

Industry body SIAM expects overall automobile sales to grow by 10-12 per cent in

2012-13 on the back of supportive Government policies, launch of new models and

intensifying enthusiasm for cars among Indian consumers.

Furthermore, Rothschild, a UK-based global financial advisory firm, forecasts that

India would become the third largest auto industry by volumes by 2015. The growth is

anticipated to be driven by increase in investments by auto makers that would expand

the capacity from 4.8 million units in 2010 to 12 million in 2018. New launches,

strengthening dealership networks, strategic alliances and predicted mergers and

acquisitions (M&As) are expected to provide an impetus to the sector in the years to

come.

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________________ ____ _________________________ Disclaimer:

This document prepared by our research analysts does not constitute an offer or solicitation

for the purchase or sale of any financial instrument or as an official confirmation of any

transaction. The information contained herein is from publicly available data or other

sources believed to be reliable but do not represent that it is accurate or complete and it

should not be relied on as such. Firstcall India Equity Advisors Pvt. Ltd. or any of it’s

affiliates shall not be in any way responsible for any loss or damage that may arise to any

person from any inadvertent error in the information contained in this report. This document

is provide for assistance only and is not intended to be and must not alone be taken as the

basis for an investment decision.

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