Can Tata Motors topple Mahindra & Mahindra?

Tata Motors (TML) is closing in on Mahindra & Mahindra (M&M) in the sales volume of passenger vehicle (PV) segment, thanks to the brimming demand for SUV Nexon and hatchback Tiago. The difference between the third and the fourth biggest players narrowed to 1,313 units during April-August period. The difference stood at 26,483 units in the same period last year.

What does it mean for Tatas? For long, Tata Motors has been trying to turn around its domestic PV business and it hired executives from outside, introduced new brands, stylised the products and cut down the production costs for pricing power. Finally, it halted the production of the white elephant in the portfolio, Nano. Now the financials are ticking up, thanks to the launches like Tiago, Nexon, Tigor and Hexa. Older models like the Bolt and Zest are also attracting customers.

Mahindra has sold 100,318 units between April and August because of its best-selling models like Bolero, Scorpio, XUV500. About a couple of weeks back, it launched the much awaited Marazzo at a launch offer price of Rs 9.99 lakh (ex- showroom). It's the first joint product of Mahindra Automotive North America (MANA) and Mahindra Research Valley (MRV). Chairman Anand Mahindra termed the vehicle as a 'game changer' for the company.

The upcoming launches for Mahindra are Y400 (Mahindra XUV700) and S201 (codenames). Managing director Pawan Goenka recently said that all the new launches, namely Marazzo, S201 and Y400 are in the white spaces. "These vehicles will not be replacing any of the existing products but will be additional brands that will operate in new segments for us," he said. The Y400 will be a premium vehicle, while the Marazzo and S201 are vehicles in the mass segment. The three new launches are expected to add sales volume of 8,000- 9,000 a month, added Goenka.

Tata Motors kicks off the festive season with the launch of the new Tata Tiago NRG, which the company describes as an Urban Toughroader and is priced at Rs 5.49 lakh for the petrol version and at Rs 6.31 lakhs for its diesel version. Early next year, the company will launch the much-awaited Tata Harrier SUV. Its architecture is derived from the legendary Land Rover D8.

Can TML overtake Mahindra in its financial performance? Mahindra (which is also world's largest tractor manufacturer) is valued at Rs 1.17 lakh crore in the stock market. The share price moved up 46 per cent in the last one year because of its strong financial results. It made a consolidated income of Rs 93,896 crore in the last financial year, up by 4.66 per cent. The profit went up by 96.46 per cent to Rs 7,958 crore. In the first quarter of this financial year, the standalone revenue rose by 9.6 per cent to Rs 13,520 crore, while profit surged by 59.4 per cent to Rs 1,221 crore.

The market capitalisation of Tata Motors (which also owns Jaguar Land Rover (JLR) brands and truck manufacturing business) stands at Rs 72,600 crore. The share price has fallen around 40 per cent in the last one year because of the falling sales of JLR. The consolidated income of the auto major went up 7.65 per cent to Rs 2.96 lakh crore in the last financial year. The profit rose 20.3 per cent to Rs 9,091 crore. The standalone revenue has increased by 62 per cent to Rs 16,803 crore in the first quarter, while it recorded a profit of Rs 1,188 crore, compared to a loss of Rs 467 crore in the same quarter last year.

TML is creating a strong automobile portfolio for the domestic market, while battling the headwind in the global market. Mahindra is struggling to crack into the markets of the top two in India--- Maruti and Hyundai. In a nutshell, both are fighting their own battles. Mahindra is financially strong now, while the JLR's return can lift the performance of Tata Motors.