Tata Motors Rises Despite Low Target

Brokerage firm Jefferies has cut its price target on Tata Motors Ltd. to ₹550 on Monday, August 11, from ₹600 earlier after its June quarter results, that were reported after market hours on Friday. The stock though, is the

top gainer on the Nifty 50 index.

Jefferies wrote in its note that it sees multiple headwinds across businesses for Tata Motors as JLR is facing increased competition and consumption tax in China, higher warranty costs and Battery Electric Vehicle transition, while its key models are starting to age.

In India, the Passenger Vehicle market share is also starting to slip and margins too are under pressure. This, along with weak demand in the commercial vehicle segments.

The brokerage also said that it

remains unconvinced about the recent acquisition of Iveco's commercial trucking business. As a result, Jefferies has cut its Earnings Per Share (EPS) estimates for Tata Motors by 8% to 15%.

On the flip side, CLSA has an "outperform" rating on the stock with a price target of ₹805.

It said that JLR is cautious on demand for the current financial year due to tariffs and luxury car tax in China and hence, it is cautious on JLR's volume growth prospects for the year, building in a 9% decline and a 5.5% EBIT margin, which is the lower end of the 5% to 7%

guidance for JLR.

Out of the 33 analysts that have coverage on Tata Motors, 18 of them have a "buy" rating, nine say "hold", while six have a "sell" rating.