Tata Motors, Tata Motors DVR hit 52-week low on drop in global sales

Shares of Tata Motors and Tata Motors (DVR) have hit their respective 52-week lows after the company reported 5% drop in global sales, including that of Jaguar Land Rover (JLR), to 92,639 units in July.

“Global wholesales of all Tata Motors’ commercial vehicles and Tata Daewoo range in July 2018 were at 40,443 units, higher by 29%, over July 2017,” the company said in a regulatory filing.

The company's global sales of all passenger vehicles were at 52,196 units in July 2018, down 22% from July last year. Global sales of JLR were at 35,007 units in July. Jaguar wholesales for the month stood at 12,427 units, while Land Rover sales were at 22,580 vehicles, it added.

Tata Motors has dipped 3% to Rs 243, fallen below its previous 52-week low of Rs 248 touched on July 18, 2018 in intra-day trade. Tata Motors DVR too slipped 3% to Rs 136 in intra-day trade, below its previous low of Rs 137 recorded on August 1, 2018 on the BSE.

In past three months, Tata Motors (down 25%) and Tata Motors DVR (down 30%) have underperformed the market by falling more than 20% as compared to 5.9% rise in the S&P BSE Sensex.

Analyst at Reliance Securities believe that the near-term challenges in terms of profitability and cash flow for JLR to persist, while the Management’s thrust on key six verticals with more emphasis on cash flow and prudent use of fund for capex would result in balance sheet improvement in FY20E.

“Exit from unwanted business and curtailing investment indicates Tata Motors’s focus on core business. Further, the recent correction in stock price provides an opportunity to own good business, at favorable risk reward,” the brokerage firm said in Q1FY19 result update.

“We maintain our “BUY” recommendation on the stock with a revised SOTP based target price of to Rs 325 (from Rs 375 earlier), valuing standalone business at Rs 140, JLR at Rs 322 and other subsidiaries at Rs 55, based on FY20E EBITDA, post excluding net debt of Rs192/share,” it added.

Tata Motors