Actually, Tata Motors fell in the last three days. At the National Stock Exchange [NSE] India, it fell by about 16% in the last three days. And the price from which it fell was rather low. So, right now, we have a situation where Tata Motors is available at something like a 15-month low. So, this is a pretty good price to enter the stock. Though I do agree that the stock could be volatile in the short term if oil prices were to rise. But this is essentially sentiment based.
I can recall that when Ratan Tata, the Chairman of the group, unveiled his ambition to build a peoples' car, he got very bad press and it was his pet project. Earlier, Tata Motirs [TTM] used to be called TELCO--Tata Engineering and Locomotive Company Limited and it was a truck and bus major. So, everyone wrote against him and they all said that this man, the new Chairman, was going to finish off such an old company. Ratan Tata's pet car project was apparently worth $300 million.
This was around 2001 when the stock was badly battered and one could buy a share was about $1.80-$2.00, then in 2007, when the Indian markets touched new highs and auto stocks saw a rally, the same stock could be bought for ten times the 2001 value. By 2007, no one ever doubted the company, nor did people doubt the potential of the Chairman to work miracles.
Now, they got the Tata Nano, most probably, the world's cheapest car at $2000. So, 18-20% is actually a defensive return on the stock in the next two quarters. Also, the stock has been known for giving pretty good dividends. It's an excellent buy.
$12.2 (06/14/08)
