Tata Motors, what a disaster! Investors like us who invested certain percentage of their portfolio into this business last year are either in red or neutral on their positions with Tata Motors stock. We think a patience will be tested of many investors who are holding their positions within Tata Motors from last one year.

It is a heart breaking moment but we can’t let run our emotions and we need to analyse this situation rationally thinking that we are the part owners of this business.

So let us look at the results and try to understand this situation rationally. Don’t forget that this business fetches approximately Rs 250,000 crore plus money and has an EBITA of around Rs 20,000 crore.

For the year 2015 this business had seen a growth of 13% in its total Net Sales or revenues from its operations. However, they have reported the same percentile growth in their expenses. The biggest culprit within expenses is the cost of raw materials and other expenses. The other shocking expense to dent its Net Profits was the taxes, which jumped up by 60% compare to its last year numbers.

Looking at its Balance Sheet, we still need more information in regards to how the total shareholders’ equity had fallen down from Rs 65,603.45 to Rs 56,261.92 in the year 2015. If the business has reported profits of Rs 14,000 crores and all of that money has been reinvested where also dividends are not paid any, than shareholders fund should go up to its previous year’s figure!

If you look at the number 10 in the notes of press release it gives us a rough calculations of how the shareholders fund got decreased. But we need more insight and details in regards to it. So watch out this space for Tata Motors updates as we will share that with you as soon as we find out.

The year 2015 was also the disaster for the domestic business. They reported losses of around Rs 4,738 crore. Mind you that as investor we have invested around Rs 43,000 crore within its domestic business. They really have to turn around their domestic business and will have to work hard to trim those losses. As it is impacting to its overall profits as well as denting its business value.

Coming to the valuations, we valued this business after its results for the year end 2015 to be Rs 472 per share. We did see price falling in the market to those levels today. But looking forward, we haven’t seen any updates within the analysts’ consensus after the release of reports. Looking at the past 10 year’s performance of its intrinsic values, we think its intrinsic values for the year end 2016 will be Rs 519 per share and Rs 571 per share for the year end 2017.

Tata Motors is trading at discount to its future values, but in saying that, to invest any fresh money into this stock we need to know exactly what is happening with their capital accounts.

We do own shares of Tata Motors.

Happy Investing!