Published by Gulshan Sachdev on 22/03/2019 at 10:14 PM

Case Study Analysis – Tata Motors (Reducing PE doesn’t always mean a good buy)

Tata Motors was giving back to back poor quarterly results. The price was dropping and so does the PE. Lower PE is a good sign, but if there are no profits, then the existing PE levels are not sustainable. As we have seen in Why low PE does not guarantee value buying? that it’s the sustained profits which maintains the PE to its historical levels while there is constant rise in stock price

But poor quarterly results continued from Tata Motor. This was due to ban of diesel cars in Europe, Brexit, Trade War, Sales drop in China etc. Price continued to drop in sync to the earnings and so does the PE.