Tata Motors rallies above Rs 400 levels to hit fresh record high

NEW DELHI: Shares of Tata Motors have been in an uptrend so far in the year 2013 despite mounting concerns of slowdown in the domestic business. Most brokerages have kept a target of over Rs 400 for the global auto giant post its results for the quarter ended September 30.

Tata Motors Ltd, the country's biggest automaker by revenue, beat analyst estimates by posting a 71 per cent jump in profit, its first quarterly gain in a year, helped by buoyant sales at luxury unit Jaguar Land Rover Ltd received a lift from new models.

Shares of Tata Motors rallied a little over 4 per cent in trade to touch its intraday high as well as fresh record high of Rs 405 on the Bombay Stock Exchange. At 09:50 a.m.; the pared some of the morning gains and was trading 0.9 per cent higher at Rs 402.85.

Analysts expect JLR to sustain its strong performance driven by continued momentum in the global luxury vehicle market, success of the recently launched models and strong product launch pipeline.

The stock has rallied nearly 28 per cent so far in the year 2013 citing improvement in global macros and robust sales from its UK-subsidiary, as of data collected on 27 November.

“Well Tata Motors is the one stock that we have been recommending to our clients to buy even on a bad day as we have assigned a target of Rs 445,” said Gaurang Shah, VP, Geojit BNP Paribas Financial Services in an interview with ET Now.

“So, even from short term point of view if somebody wants to buy into Tata Motors, we would recommend that 410, 420 should be the target from short to medium term point of view,” he added.

According to analysts, Tata Motors can give a good set of return in the auto space despite the fact that its domestic business will still take some time to recover. Given the fact that the stock has already moved a bit, it is still an attractive bet, say analysts.

“We still prefer Tata Motors as top pick. However, from a near-term perspective, highlighting any particular catalyst or trigger will be difficult. So Tata Motors still remains top pick whether it can keep on surprising on the sales data,” said Gautam Chhaocharia, Head of India Research, UBS.

Tata Motors, UK subsidiary JLR reported sale of 34,101 units in the month of October 2013, registering a growth of 35 per cent over the corresponding month of 2012, when the company had sold 25,176 units.

“However, we don’t see any reason for cutting our view on the stock. We are fairly comfortable on the earnings estimates part. We do not think the street is overestimating the earnings over the next couple of years,” he added.

Chhaocharia is of the view that there is still some room for valuations to move up and it is no longer cheap and attractive as it was a year back. But there is still room for it to go up from a valuation perspective also, he added.

Brokerage Name	Rating	Target Price
JPMorgan	Overweight	Raised to Rs 445 from Rs 325
Macquarie	Outperform	Rs 475
UBS	BUY	Rs 460
CLSA	Outperform	Raised to Rs 415 from Rs 380
Credit Suisse	Outperform	Raised to Rs 440 from Rs 400
BofA-ML	Overweight	Rs 454
Citigroup	BUY	Rs 393
Jefferies	Hold	Rs 318
Kotak Mahindra Bank	ADD	Raised to Rs 404 from Rs 375
Barclays	Overweight	Rs 431
Deutsche Bank	BUY	Rs 400

Source: ET Now (rating released post Q2 results)