Tata Motors (TTM) is an Indian auto producer, and one of the largest commercial vehicle manufacturers in the world. Prospective investors are getting spooked by the losses in Tata's domestic business, driven by the many low-cost (or even money-losing) vehicles it sells within India. But those investors don't seem to understand that Tata's got an ace up its sleeve: the high-end Jaguar Land Rover division.

A diamond in the haystack
Jaguar Land Rover, as its name implies, designs and produces the British Jaguar and Land Rover auto brands. 78% of Land Rovers are exported to 169 countries around the world, and 70% of Jaguars are exported to 63 countries. The rest are sold within the UK -- and sales have been booming.

Indeed, sales of Jaguar Land Rover vehicles expanded 16% during the first nine months of this year alone. Meanwhile, Ford's (F 0.51%) sales only grew 13% during the first nine months of this year, while General Motors (GM 4.93%) reported a mere 2.3% revenue growth across all divisions for the same period  .

Jaguar Land Rover vehicles may not be considered ultra-luxury supercars, but they're certainly not cheap. In that middle-of-the-road position, the cars have no comparable peers.

Furthermore, Tata has achieved substantial profit margins on each unit sold -- an average of 14% to 17% throughout 2012. BMW's average profit margin for the same period was just under 11%.

Undervalued
These impressive growth and margin figures, along with the Jaguar Land Rover brand heritage, led Julian Sinclair, Chief Investment Officer of Talisman Global Asset Management, to state that the Jaguar Land Rover business alone could be worth around $17 billion. This makes Tata's current market capitalization of $19.8 billion look conservative .

Nonetheless, it looks as if the Jaguar Land Rover business is holding Tata together. For example, Tata recently reported fiscal second-quarter results that beat estimates. However, for the quarter, Tata as a group made a profit of $558 million -- but Jaguar Land Rover contributed $811 million to this, indicating that Tata's domestic business actually lost $253 million .

That means Tata is relatively undervalued considering the gains and value of its luxury Jaguar Land Rover brand, and extremely undervalued compared to U.S. peers General Motors and Ford.

Impressive returns
Actually, the high-margin Jaguar Land Rover side of Tata's business means that Tata is achieving a better return on assets than both of its US peers, and  a better return on shareholder equity than General Motors.

Company

Tata

General Motors

Ford

Assets

1,700,265

149,422

190,554

Shareholder Equity

380,078

37,000

16,311

Net Income

99,763

6,136

5,664

Return on Assets

6%

4%

3 %

Return on equity

26%

17%

35%

Source: Respective 2012 annual reports. Figures in millions. GM and Ford figures in $US. Tata figures in India rupee's.

Despite the fact that Tata is more efficient than both Ford and GM, Tata trades at a enterprise value to earnings before interest and tax, or EV/EBIT, similar to GM but half that of Ford. In particular, Tata trades at a historic EV/EBIT value of 8.7, GM trades at 7.4, and Ford trades at 19.8.

Foolish summary
Tata's Jaguar Land Rover business is highly lucrative, pulling the company ahead of its US peers on several metrics. This helps make Tata look cheap on a number of metrics. Even with its Indian operations losing money, the company could still be a better play than its US peers.