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
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.