Tata Motors expected to do better than Maruti in near future

In comparison, Tata Motors has corrected by more than 20% in same period. And this is a lot to do with the issues faced by the company in Europe and then in China.

Maruti has been making news recently for things other than its vehicles too. And it is which no other Indian subsidiary of a MNC has ever done before. The Indian entity has surpassed the market cap of its parent Suzuki in Japan. This is a big achievement for an Indian company. But in past year, Maruti has delivered a return of stunning 65% and is looking expensive in the available one in automotive packs. 
 
In comparison, Tata Motors has corrected by more than 20% in same period. And this is a lot to do with the issues faced by the company in Europe and then in China. When compared on valuations front, Tata Motors seems to be a no-brainer for a lot of investors. And considering that Maruti is already being referred to as an expensive pick in automobile industry, chances of money moving to Tata Motors seem higher than that to Maruti. This in turn will have a positive impact on the stock, which is expected to do well in next year and a half.
 
Even company’s management is bullish that Tata Motors will be able to deliver double-digit growths when overall industry is expected to grow at 6% to 8%. The company is also renewing its focus on the domestic market as it expect the same to pick and act as a counter balance to the issues faced in European markets.

Some experts are also of the view that market is getting over pessimistic about the China issues and the stock might not go much lower than the current levels. And with a slew of launches lined up where company is also set to launch entry level Jaguar in Asian markets, the near term future seems bright for Tata Motors. Another thing to note is that unlike other luxury brands like Audi, etc., company’s Jaguar brand has still got a lot of potential to grow.

For the retail investors, it should be noted that automobile sector is cyclical in nature and consequently, the stocks can go down steeply even from the levels which look very cheap. But having said that, it seems that market has already priced in all the possible negatives in the stock price, even before the same has happened in reality. So risk-reward ratio seems to be more in favor of reward currently. But this will not happen immediately. The investors will have to have the appetite of further short-term shocks and have a lot of patience, if they want to make decent returns on this counter.