Analyst's Diary: At 10x earnings multiple, is Tata Motors a steal?

Never mind the many successful turnaround stories in the Indian market, none come close to Tata Motors. Its story is one for the books. The Indian automotive giant, whose market value eroded by about 89 per cent between February 2015 and March 2020, has staged a comeback like no other. The share has soared over seven times in the last five years. What's more impressive is it still trades at a P/E (price-to-earnings) ratio of just 10 times. This mouth-watering valuation makes it much cheaper than peers like Maruti Suzuki and Ashok Leyland, which command a P/E of 27 times each. So, does that mean Tata Motor's rally still has legs? Before we get to the answer, let's first take a brief detour to its troubled history. It may have clues to the future.