Multiple brokerages see lack of catalysts in the short term on the back of weak demand and volume growth.
Tata Motors’ shares fell 4 percent intraday on Monday as caution gripped investors due to auto tariff threat by US as well as weak JLR trends as well. Multiple brokerages see lack of catalysts in the short term on the back of weak demand and volume growth.
The stock touched an intraday high of Rs 308.15 and an intraday low of Rs 295.20.
US President Donald Trump on Friday threatened to impose a 20 percent tariff on all imports of EU-assembled cars, a month after his administration launched an investigation into whether auto imports posed a national security threat.
“If they decide to raise their import tariffs, we’ll have no choice, again, but to react,” EU Commission Vice President Jyrki Katainen told French newspaper Le Monde.
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“We don’t want to fight (over trade) in public via Twitter. We should end the escalation,” he said in the comments published on Saturday.
Brokerage: CLSA | Rating: Sell | Target: Rs 295
The global research firm observed that the firm’s benefits from operating leverage will be limited on the back of weak demand. Further, it expects JLR’s cash flow to remain under pressure for FY19-20. Overall, it remains negative on JLR on the back of these multiple headwinds.
Brokerage: Credit Suisse | Rating: Outperform | Target: Rs 460
The financial services firm expects moderate volume growth for JLR across regions. It highlighted how JLR’s capex plan could be flat for three years and that the medium term margin plan is reliant on new architecture.
Brokerage: Deutsche Bank | Rating: Buy | Target: Rs 380
The investment bank is now more confident of the firm’s plan to reduce cost base. However, it said that in the short term, the stock is lacking material catalysts. It also said that the consensus was building in lower volume growth for JLR.
Brokerage: Morgan Stanley | Rating: Equalweight | Target: Rs 339
Morgan Stanley observed that free cash flow being negative in FY18 and FY19 was to be noted. Regulations pushing the industry towards high-cost electrified power trains, it said, adding that despite favorable trend JLR's margin is lower than those of peers.
At 13:05 hrs Tata Motors was quoting at Rs 295.35, down Rs 12.80, or 4.15 percent, on the BSE.