As Tata Nano is expected to finally hit the road in July, market experts believe that over the long term, Nano will have a positive impact on the company’s revenues. They, however, feel that its impact on profitability and share prices of Tata Motors will depend on the volume of sale and margin that it makes.
“While that car will boost the revenues of the company beginning 2010, its contribution to profitability will be limited and will depend on the margins that the company operates,” said Alex Mathew, head research, Geojit Financial Services. “The softening of raw material cost will also help," referring to inputs like steel.
While the impact of Nano on the company is expected to be positive starting 2010, the outlook for the Tata Motors stock price is not seen positive. “We are not very optimistic on the acquisitions that the company had done in the past we need to see the margins the company makes on Nano,” said Mathew.