Tata Motors Passenger Vehicles shares downgraded by BofA on JLR concerns

Shares of Tata Motors Passenger Vehicles Ltd., the currently trading entity of Tata Motors Ltd

., after its CV business demerger, have been downgraded by BofA Securities on Thursday, October 16.

BofA Securities has downgraded the stock to "underperform" and has a price target of ₹375. However, the revised price target implies a potential downside of only 4% from current levels.

The brokerage said that Jaguar Land Rover, the luxury car manufacturing subsidiary of the passenger vehicle division, currently has very tough business fundamentals, and that will continue to weigh on the stock. This is because, JLR forms 45% of BofA's overall price target for the passenger vehicle division.

Cyber issues, worries related to US tariffs, a slowdown in European Union and China, could prompt JLR to cut guidance again, according to BofA Securities, who added that the balance sheet may once again see a build up of debt.

Tata Motors JLR had announced at the end of the March quarter that it has now become a debt-free enterprise, as it had earlier envisaged.

Although the India Passenger Vehicles business for the company is getting better on the market share front, its margins need improvement, according to the BofA note.

Tata Motors Passenger Vehicles Ltd. began trading at ₹400 per share after a special pre-open price discovery session earlier in the week. After some brief buying interest as trading resumed, the selling pressure has returned to the stock.

34 analysts have coverage on Tata Motors Passenger Vehicles Ltd., of which 16 have a "buy" rating, 11 say "hold", while seven have a "sell" rating on the stock.

Shares of Tata Motors Passenger Vehicles Ltd. ended 0.9% lower on Wednesday at ₹391.9.