Tata Motors extend gains for second day; hits fresh record high

NEW DELHI: Tata Motors Ltd surged over 3 per cent in trade on Thursday, extending gains of nearly 5 per cent in yesterday’s trade after two brokerages upgraded the stock.

Leading global brokerages CLSA and Credit Suisse upgraded their ratings on the stock, citing multiple product launches from JLR and receding fears of slowdown in China.

Tata Motors surged over 3 per cent in trade to touch its 52-week high of Rs 337.05. At 12:00 pm, the stock was trading 2.6 per cent higher at Rs 335.40.

Asia Pacific-focused broker CLSA upgraded Tata Motors from ‘outperform’ to ‘buy’ and raised the target price from Rs 300 to Rs 385 on expectations that JLR would deliver strong performance over FY14-15, on the back of new product launches.

Tata Motors was the best performing stock in the year 2012 among the 30-Sensex stocks. The stock gained over 75 per cent in the previous year compared to the BSE Sensex which gained 26 per cent in the same period.

CLSA believes India business remains under pressure, but expects the commercial vehicle (CV) cycle to improve by FY15. The brokerage has also upgraded FY14-15 EPS by 5-8 per cent.

The brokerage firm had upgraded JLR’s FY14-15 volumes by 3-5 per cent, but cut India volumes by 7 per cent, resulting in a 5-8% upgrade to consol EPS.

Credit Suisse also upgraded its rating on Tata Motors to ‘Outperform’ with a target price of Rs 390 on Wednesday.

“We expect margins to expand ~200 bps over the next four quarters driven by an improving product mix along with an ever-increasing share from China where PBT margins are the same as average, but due to higher realisations per vehicle, profitability is almost double,” it said.