CLSA maintains ‘buy’ on Tata Motors

MUMBAI: CLSA maintained ‘buy’ recommendation on Tata Motors with a target price of Rs 370 per share even as the company’s global sales of luxury brands Jaguar Land Rover fell 31 percent Month-on-Month (MoM). It doesn’t see any evidence of a broad-based demand weakness and expects the company to report a consolidated net profit of Rs 42.7 billion, up 70% Year-on-Year.

“We were expecting a lower MoM drop this year due to strong Evoque demand. Tata is not seeing any signs of demand weakness in any geography and continues to guide for 100-110K Evoque volumes for FY13 and 4-6% growth for non-Evoque industry sales, implying FY13 volumes of 370K-385K (we are at 390K),” the report said.

CLSA continues to like Tata Motors as it expects multiple volume triggers in the form of Evoque ramp-up and the launch of the new Range Rover platform by December 2012 end.

“The latter has the potential of meaningfully lifting FY14 volume expectations for JLR. Multiple cost initiatives are underway, which together with an improving regional sales-mix and favourable currency trends, should drive strong margins,” the report added.

The stock was at Rs 263.90, down 2.66 percent on the BSE. It touched a high of Rs 266.75 and a low of Rs 263.65 in early trade.