M&M Vs TATA motors which is best for investment?

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Many of us are fond of investments and want to generate wealth through investing in stocks, as we all know that India’s Automotive Industry is worth more than $100 bn and contributes 8% of the country’s total export. Also accounts for 2.3% of India’s GDP all set to become the 3rd largest in the world by 2025. And two big players in this industry are Mahindra & Mahindra motors and TATA motors, now most of us get confused about which stock is best. so let’s compare M&M vs TATA motors

M&M vs TATA motors

The comparison will be on the basis of the below factors:

M&M vs Tata Motors-Fundamental Ratios

M&M vs Tata Motors- Balance sheet & profit and loss

M&M vs Tata Motors- Units sold last month

M&M vs Tata Motors- Share price valuation

M&M vs Tata Motors- Growth aspects & Future planning

M&M vs TATA Motors- Fundamental Ratios:

ROI: M&M’s Return on investment is currently 6.05 whereas, TATA motor’s ROI is -2.69, usually an ROI of approx 7 or more is suitable for investing in stocks

ROCE: ROCE is the primary measure of how efficiently a company utilizes all available capital to generate additional profits. M&M’s ROCE is 12.67 whereas, TATA Motor’s ROCE is 1.26 which is much lesser than M&M’s usually higher ROCE denotes good health of the company

Debt to Equity ratio: it denoted the funds running the company are mostly from equity or from debts usually ratios less than 1 are safer but M&M has a ratio of 158.11 whereas, TATA Motors’ ratio is 250.14 both the companies have high debt

5-year average ROE: Return on Equity means how much the company is generating from equity available just like from the capital. Usually, an ROE of 15 to 20% is considered safe, M&M’s ROE is 8.93 whereas, TATA motor’s ROE is -11.20

5-year average net profit margin: net profit margin is the margin company generates selling its products after deducting its expenses, M&M’s net profit margin is 4.46 whereas, TATA Motors’ net profit margin is -4.07 negative because of losses

5-year average EBITDA margin: EBITDA margin stands for earnings before interest, taxes, depreciation, and amortization its shows the company’s health before all these deductions from the profit, M&M’s EBITDA margin is 16.92 whereas, TATA motor’s EBITDA margin is 7.33. Usually, a good EBITDA margin is 10 or more

P.B Ratio: price book ratio (PB) ratio compares the price of the stock with its book (accounting value). The higher the PB ratio, the more expensive is the stock, and vice-versa, usually a P.B ratio is less than 3 then the stock is considered undervalued. M&M’s PB ratio is 2.44 whereas, TATA motor’s PB ratio is 2.78

Promoter Holdings: The percentage of the promoter’s holdings in a company denoted the confidence of the promoter in the company, higher is always good, M&M’s promoters holding is 19.47% whereas, TATA motors holdings is 46.40%

Pledged promoter holdings: it denotes the percentage of promoter holdings in a company that is made collateral to any financial institutions to borrow money for the company a higher percentage pledged is always risky, M&M’s has 0.01% pledged its holdings, whereas TATA motors have pledged 0.85% of its holdings

M&M vs Tata Motors- Balance sheet & profit & loss

Revenue: TATA motor’s revenue for last year was at RS (cr) 2,81,617.50 and its revenue growth for the last 5 years is at 0.72%(average), whereas M&M’s revenue for last year was at Rs (cr) 93,375.04 and its revenue growth for last 5 years is at 1.69%(average)

Net income: Net income is the company’s income after deducting the cost of goods sold, expenses, depreciation and amortization, interest, and taxes for an accounting period. M&M’s net income for last year stood at RS (cr) 6,577.32, whereas TATA motors net income stood at a loss of Rs (cr) -11,367.41

EPS: Earning per share indicates the profitability of a company it is calculated by dividing net income by the total number of outstanding shares of the company( Total no of outstanding shares stands for the total number of shares issued and actively held by stockholders—both outside investors and corporate insiders. Now as TATA motor’s net income is at a loss its EPS is also negative at -29.88, whereas M&M’s EPS is at 59.20, a higher EPS is always considered good

Total Debt: it means to the loans a company has taken to financially support its functions, higher loans are considered riskier (except in financial institutions) M&M’s total debt is Rs (cr) 80,086.56, whereas TATA motor’s total debt is Rs (cr) 1,42,130.57

M&M vs Tata Motors- Units sold last month

Tata Motors’ sales volume in the domestic and international market for May 2022 stood at 76,210 vehicles – a 185% surge from the 26,661 units it sold a year back.

This is the company’s highest-ever monthly sales since inception – PV and EV domestic combined – led by robust dispatch of Nexon, Harrier, and Safari.

Mahindra & Mahindra has clocked a massive 208 percent year-on-year growth in May, while the tractors segment registered a 48 percent growth over the year-ago period.

Auto sales for May 2022 stood at 53,726 vehicles, up from 17,447 vehicles sold a year back.

M&M vs Tata Motors- Share price valuation

P.E ratio: Price to earnings ratio shows the valuation of a company’s share price whether it is overvalued or undervalued or reasonably valued, generally, it can be compared with the P.E ratio of the industry under which the company operates, it is calculated by dividing the company’s share price by its earnings per share.

M&M’s P.E ratio is 19.03 it can be seen as undervalued compared with its industry P.E which is 113.52 whereas TATA motor’s P.E is at negative -13.94 because its EPS is also negative so it can also be considered undervalued as per industry P.E

M&M vs Tata Motors- Returns

Tata Motors’ 5-year returns are negative -8.16%, 1-year returns are positive at 34.85% & its maximum returns from the listing date that is the year 2000 Jan19 to till date is 873.51%

M&M’s 5-year returns are positive at 46.74%, and 1-year returns are also positive at 30.24% & its maximum returns from the listing date is the year 2000 Jan19 to till date is 1575.31%

M&M vs Tata Motors- Growth aspects & Future planning

M&M announced huge capital expenditure plans over 2022-2024. M&M plans to incur an expense of Rs 153 bn on auto, farm equipment, and electric vehicles (EV). Out of this, Rs 32 bn is already spent in fiscal 2022. The remaining will be spent over the remaining two years.

Before the pandemic period, M&M was spending Rs 30 to 40 bn per annum on CAPEX. But with the pandemic running its course, M&M had to cut off its CAPEX. However, it seems it is going back to its normal levels of CAPEX now that the pandemic is over.

M&M intends to improvise its core strength through CAPEX. It is trying to work on maintaining a strong brand value, improving the supply chain, focusing on the development of EVs, and cost optimization to achieve its goals. M&M intends to gain the pole position in SUVs – the position they had three years ago. These plans send a positive sentiment to the market. Hence investors believe the company will generate huge returns for them. Hence, the share price is rallying.

On 30 May 2022, M&M announced it is divesting its 2.76% stake in TVS Automated Solution Private (TASL). After this, the company will have no stake in TASL. The stake was sold for Rs 450 m. Hence, when a company sells its stake in a subsidiary that was not adding value to it, the share price will rise.

Tata Motors has recently launched the Nexon EV Max in the Indian market. In comparison to the Nexon EV, it offered a larger battery pack and increased range.

Shailesh Chandra, MD of Tata Motors Passenger Vehicles, told ET that supported by strong demand for a new range of products, combined with innovative action taken on the supply side, sales have emerged stronger every month. “All our products are leaders in their respective segments, forming a portfolio that is rich in selections, ranging from smart trim choices to strong powertrain options, making us the only OEM catering to customer needs across petrol, diesel, CNG, and EVs,” Chandra said. While January to May saw Tata Motors registering a volumes growth of 50-60%, Hyundai Motor India saw a 10-15% decline, in part due to the problems with the availability of chips

Chandra said the semi-conductor situation remains uncertain and Tata Motors will continue to monitor the situation closely while refining its agile, a multi-pronged approach to secure supplies

  • In the next three to five years, the company wants to sell 20% CNG vehicles, 20% EVs, and around 50% petrol vehicles, and the rest 10% diesel vehicles out of every 100 vehicles to be sold.
  • Currently, the company is selling around 94%-95% of petrol vehicles.
  • Further, the company wants to focus on stepping up CNG vehicle sales by utilizing the strong distribution network of natural gas companies.
  • In FY22, the company aims to sell 3.7 Lakh units which looks like an easy target for the company on cards. If this happens so, it will be an increase of 65% YoY in terms of units sold.


Both the companies are big players in the automobile industry, but looking at the financials M&M is in a better position than TATA motors but TATA is also creating a good comeback with rising in revenue and new EV cars every month. In a larger picture, TATA motors EV growth can be seen as much bigger than M&M but the future is unpredictable due to a shortage in semiconductors. TATA motor’s presence across the globe is also greater than M&M but M&M has shown steady performance over the period and now with the automobile industry boom M&M will surely benefit. AT last, it can only be said that both the stocks are undervalued but also has a huge debt, so it’s upon investors to choose the best among both.


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