Tata Motors a turnaround in the making: Prakash Diwan

In a chat with ET Now, Prakash Diwan, Director, Altamount Capital, shares his view on Tata Motors.

ET Now: Let us talk about Tata Motors DVR — the most cherish stock of 2014. Frankly, minority shareholders do not care for voting rights. Then why is the stock sitting at a 52-week low?

Prakash Diwan: Because the underlying fundamentals itself has been on a slippage. But having said that, I really do not know…

ET Now: Is it a value buy?

Prakash Diwan: Tata Motors is definitely is a turnaround in the making. It is just that you cannot really catch the bottom. The way the stock has consolidated and this whole distribution happened at roughly this four-to-five kind of a zone. The levels of Rs 418-425 was the zone, where you have probably seen that stock bottoming out.

ET Now: Given an option to buy Maruti (which is trading at about 20 times plus one-year forward), Tata Motors DVR (which is trading at 15 times plus on a trailing 12-month PE) or Tata Motors ( which trailing 15 times), which stock would you consider?

Prakash Diwan: Tata Motors. It is the growth stock and a value-stock. You would buy both, but the reason for choosing Tata Motors is that it is still not attracting the right kind of attention because everybody is linking the China slowdown with the performance of the company.

Fortunately, for Tata Motors, China has never been too big. It was always a JV. So, the company has not put capex behind it. Europe could impact a bit, but I do not see the Grexit issue dampening the entire European markets further.