Tata Motors stock speeds up from JLR volumes

Tata Motors, which had lost the tag of the country’s most valued automobile company to Maruti Suzuki in July this year, has added Rs 29,000 crore to its market capitalisation in the past 11 trading sessions.

This has come on the back of a 36 per cent surge in the stock price, triggered by improved outlook for sales of its Jaguar Land Rover arm. JLR, its luxury vehicle business, accounts for 83 per cent of the consolidated revenue. Maruti Suzuki, which has rallied almost 50 per cent in a year on improving market share and margins, has a market cap of Rs 132,306 crore (as on Thursday). Tata Motors, after the sharp gain, has a market cap of Rs 109,434 crore.

“The stock had corrected sharply on potential concerns around JLR sales in China and the recovery is also sharp. JLR has done reasonable volumes in September and the decline in China has been offset by growth in markets like North America,” said Jinesh Gandhi, senior vice-president (research) at brokerage firm Motilal Oswal.

Brokerages are bullish on the stock, which touched a 52-week low of Rs 279.15 on September 29. Gandhi said Motilal Oswal has a target price of Rs 480 on the stock, while Kotak Institutional Equities is giving a 'Buy' call with a price target of Rs 490.

“JLR’s retail volume in September increased by three per cent year on year, as a 30 per cent decline in China volumes was offset by strong growth in Europe and North America. JLR volumes in China were impacted by several transitory issues, which we believe have largely been sorted. We believe JLR volumes will recover strongly in the fourth quarter of FY16 and in FY17 as new models gain momentum,” Kotak said.

Tata Motors' global sales of all passenger vehicles in September, including JLR, jumped 40 per cent to 63,334 units in September against the same month last year. “Sales in the UK, Europe and North America have shown impressive growth year-to-date and despite a challenging macro economic environment, particularly in China, customer demand for both our Jaguar and Land Rover vehicles remains encouraging,” stated Andy Goss, group sales director at JLR, on Wednesday.

Retail volumes in China declined 30 per cent in September but this was offset by a 37 per cent growth in Europe and 59 per cent growth in North America. Overall retail sales grew three per cent in the month.