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1 Secret Auto Stock Revving Up Revenue

Justin Loiseau
November 13, 2012

Tata Motors (NYSE: TTM) reported earnings last week, and the Indian automaker continues to grow its top and bottom lines. But the road ahead isn't all sunshine and sales. A slowing Asian economy and increasing competition has some investors on the run. Let's see if Tata's got what it takes to pull in profits for your portfolio.

Number crunching
Tata Motors' sales grew to 436 billion Indian rupees ($7.9 billion), a 20% increase compared to the same quarter last year.

The company managed to hold on to 4.8% of sales, with quarterly net profit of 21 billion Indian rupees ($381 million). Unlike the 20% sales boost Tata enjoyed, net income only rose by 11% compared to last year's Q2.

For a peck of perspective, here's how Tata's sales and net income have fared over the past four years:

Source: Author, data from e*

Tata's growth has been astounding. It exploded 95% from 2008 to 2009, and has pulled in around 30% sales increases since then. The company's net income has been more sporadic, although the major dip in 2008 is complements of Tata's lucrative purchase of Jaguar Land Rover from Ford(NYSE: F) for a pithy $2.3 billion.

Innovatin' India
Although the Tata family has been a household name in India for centuries, Tata Motors only reached international acclaim after its 2008 unveiling of the Tata Nano. At $2,500, it was (and still is) the world's cheapest car.

But there's more to Tata than a MacBook-priced go-kart. With Jaguar Land Rover in its garage, this auto company packs impressive diversification. This last quarter is perfect evidence.

While stand-alone sales dropped 4% to 12.5 billion Indian rupees ($2.3 billion), Jaguar Land Rover's revenue roared ahead by 13% to 3,288 GB pounds ($5.2 billion). The same trend holds for EBITDA income and profit margins. And while I'd love to see top-line and bottom-line numbers grow across the board, I can sleep at night knowing India's economy does not dictate Tata's ultimate success or failure.

Trucking along
Tata's international presence is impressive. The company draws from t