Driven by New Ti­ago, Tata Mo­tors Breaks 200-DMA

JLR’s March US re­tail sales grew a strong 29% as against street ex­pec­ta­tion of 20% YoY

The Economic Times - - Smart -

Mum­bai: The launch of Ti­ago, a hatch­back en­try-level car, at a dis­rup­tive price, strong JLR sales num­bers, and at­trac­tive val­u­a­tions have sparked in­ter­est in the Tata Mo­tors’ counter as the stock gained as much as 4% on Wed­nes­day. Short-cov­er­ing also helped it to break its 200-day mov­ing av­er­age, said traders. Tata Mo­tors launched Ti­ago at a com­pet­i­tive price of ₹ 3.2 lakhs on Wed­nes­day, which is at least 10-20% cheaper than Maruti’s Cele­rio, Wagon R, Hyundai’s i10 with vari­ant -to-vari­ant com­par­isons. Tata Mo­tors has a pro­duc­tion ca­pac­ity of over 5,000 for Ti­ago at its Sanand plant in Gu­jarat.

More­over, JLR’s March 2016 US re­tail sales re­ported a strong 29% yearon-year growth as against a street ex­pec­ta­tion of 20%.

The stock, which opened at ₹ 374, rose to the day’s high of ₹ 382.50 be­fore clos­ing at ₹ 377.20, up 1.81%. It has surged 24% since March 1, against the Sen­sex’s 4.7%.

“We are very pos­i­tive on the stock as it con­tin­ues to of­fer best risk-re­ward in the sec­tor with many new prod­ucts in the pipeline,” said Dipen Shah, head of re­search, Ko­tak Se­cu­ri­ties.

“The Street is fac­tor­ing in a strong vol­umegrowth,say­over25%intheUS and Europe in the past few months, andJLRisen­teringaphase­whereYoY vol­ume growth is set to ac­cel­er­ate on strong prod­uct cy­cle and a small base in China and Rus­sia,” he said.

The man­age­ment re­cently said that the vol­umes will stay strong in the near term with new gaso­line en­gines for the US and China mar­kets. It also ex­pects a turn­around in do­mes­tic truck­sale­sandim­prove­mentinLCVs.

“We be­lieve that the man­age­ment’s outlook will be viewed pos­i­tively by the in­vestors,” said Kapil Singh, auto an­a­lyst, No­mura.

“The stock is cur­rently avail­able at 9.1/6.8x its FY 17/18E con­sol­i­dated EPS re­spec­tively,” said Ji­nesh Gandhi, of Moiti­lal Oswal Se­cu­ri­ties.

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