Latest fundraising by Tata Motors a prudent move: Piyush Jain, Morningstar

In a chat with ET Now, Piyush Jain, Morningstar, shares his outlook for Tata Motors. Excerpts:

ET Now: What is your initial reaction to this fundraising by Tata Motors?

Piyush Jain: It is a prudent move. I think they have taken this call based on the current macro environment. They have also kept in mind the turbulence in the European region. So, it’s basically a balancing act between their balance sheet and the macro environment.

They probably do not want to over-leverage the balance sheet at the moment. So it appears to be a prudent move.

ET Now: Are you bullish on the stock which has been touching new highs almost every single day of the last week?

Piyush Jain: There are two reasons behind this stock consistently touching new highs.

It was expected that there could be a luxury slowdown — a very sharp slowdown — in China. But that has not come about.

Secondly, there has been a turnaround in Tata Motors' India operations. Heavy commercial vehicles have turned around and passenger vehicles are beginning to show traction.

These are the two factors that have given a positive boost to its stock price. I think this rights issue has a lot to do with the stock looking good at the moment. For the stock, we are looking at a value of 600 with a positive bias. We are waiting for the results, but overall the stock looks good.