Wednesday, November 11, 2015

Mahurat Pick - Tata Motors

My pick for this Mahurat is Tata Motors. I do not hold this stock in my portfolio for the last 10 years and will add the first lot today. I will not look at it for 5 years and will evaluate it in 2020.

The Reasons for buying Tata Motors stock is:

1. Legacy of Tata Motors is more than 70 years old and the legacy of the Tata Group goes back even further. The Tata Group with their motto of Leadership with Trust is here to stay for the next 100 years at least.

2. The Jaguar Land Rover acquisition has been a master stroke. With this they have access to the latest technology and have moved the Research centre to UK.

3. HorizonNext program is launching cars at the right price point starting with the Bolt, Zest and Kite on its way. In the next 10 years I see Tata Motors having a car in every segment from the Nano to the Jaguar. Once they have loyal customers in place, the same customer will upgrade to the next car in the category.

4. They have right people at the top with Mayank Pareek who set up the Sales Process with the Maruti Team and Karl Slymm before him. The Best Practices from Maruti are being implemented in the Tata Motors Group.

5. India as an automotive market is growing. Society is becoming aspirational and disposable incomes are rising. Savings Rate may be going down but the spends are going up. There is a market for the cars.

6. Look at the trend of sales for Zest in last few months. Chugging along with now nearing 2500 units per month. The stability in numbers is heartening.

7. Capacity is available at Sanand for fresh cars. The Nano is an example of the innovation and frugal engineering.

8. People do not leave the Tata Group for life. They have the Tata Administrative Services or TAS which is second only to the IAS cadre in terms of trained personnel.

9. Vision is clear with the group logo "Leadership with Trust" and the HorizonNext program. This clarity of vision at the group level of Tatas and and at Tata Motors company level is heartening.

10. Price is attractive right now. No one is looking at Tata Motors. In 2001 when it was down in the dumps, I made 10 times the profit and got out.

People, Processes and Technology - the combination of these three lead  to success. Right leadership with streamlined processes in place and having the state of the art Technology in place.

On a personal note, I have owned 5 Tata Cars in the last 14 years. The Indica, Indigo CS, Manza, Nano and now awaiting my Zest.

2 CEOs have intervened to resolve my issues at 2 different points of time. If there is such strong Focus on Customer Experience and Customer Loyalty, the company is a blind buy.


  1. Sirjee,
    what do you mean by first lot, for how long will you be adding?

    1. Adding for 5 years trading in and out to reduce cost price of shares

  2. Which one would be better
    DVr or Regular stock

    1. For today the regular share, but good question. I will study DVR stocks also. I generally like to keep it simple. So main Tata Motors good for me.

  3. Yes, I am also a believer in Tata Motors. I sold some this year before the secondary offering was announced, and matched it up with shares from the secondary offering. JLR is going to help, and hoping that Tata Motors is doing some wonders in the electric car business for the future. It would be the ultimate success story where gasoline is priced so high in terms of per liter pricing. Most driving in India is well within the range of the electric batteries, and with batteries allowing the bigger cars to last 265 miles per charge, we are definitely improving the technology to its next higher limit. With India having adopted natural gas in a huge way, I think adoption of electric car technology will also go a long way, although they are currently expensive to produce due to the battery technology.

    In either case, I am going to hold onto Tata Motors and let the management team wake up to globalization, market share, and technology advancement

    Response from KKP on my post