Tata Motors scrip hits record high on upgrades by brokerages

Tags: News
Tata Motors surged 4 per cent to hit its all-time high on Wednesday following an ‘outperform’ recommendation by brokerage Credit Suisse, citing expectations among the Chinese dealers to sell as much as 30,000 units of its all new Range Rover in FY14. The brokerage upgraded the scrip with a price target of Rs 390 and forecast new Range Rover model to touch a sales figure of 50,000 units in FY14 from 35,000 expected earlier.

The automaker is seen as a hot bet by as much as 17 brokerages, which have recommended buy/ accumulate/ outperform on the scrip so far this month with a 12-month price range between Rs 310 and Rs 390.

The stock opened higher on Wednesday. It cemented gains and touched its day’s high of Rs 329.90 during the morning session. The upward movement continued towards the rest of the session and the auto share eventually closed at Rs 326.65, up 3.98 per cent.

“We believe that not only is the market underestimating the volumes of the new Range Rover, it is also underestimating the impact of the product on ASPs and JLR margins. The stock has underperformed peers like BMW, which is up 30 per cent. Moreover, consensus earnings have largely remained stable in this upmove, hence with our expectation of earnings upgrades kicking in we believe the stock has more upside,” said Jatin Chawla and Akshay Saxena, research analysts at Credit Suisse in a note.

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