I added more shares of Tata Motors (TTM) to my portfolio on Monday because I felt the shares were undervalued below $16. Using a limit order, I picked up a few shares at $15.65, increasing my long position in the Bombay stock. You should take note of Tata’s fiscal and monthly growth figures:
- YoY vehicles sales rose 11%
- Monthly commercial vehicles sales rose 13%
- Monthly cars and utility sales rose 14%
- Exports fell 3%
Shares of Tata Motors were hammered recently due to the weakening of the US dollar against the rupee and unexpected rate hikes from the Reserve Bank of India. The RBI raised rates to fight inflation.
Key Indicator of Growth: Retained Earnings
Tata Motors retained 11x the earnings in FY 2006 from FY 2004 (in million $).
- FY 2003: -3,481.4
- FY 2004: 2,396.7
- FY 2005: 14,033.9
- FY 2006: 23,897.0
The past is never indicative of the future as we all know, but Tata Motors pockets a substantial chunk of that robust revenue. Also, India’s GDP plans to grow at 7.5 to 8%, which means more money will be spent on infrastructure. Tata will provide the motor vehicles to aid these growth numbers.
Note: I’m long on shares of Tata Motors.
While his background is mostly related to trading stocks, he recently gained interest in real estate crowdfunding with Fundrise.