Buy Tata Motors around Rs 235-240, says Irani

Irani told CNBC-TV18, “One thing about Tata Motors is very clear that 9 out of 10 brokerage houses or research houses were positive on the stock. The stock had done well. While the numbers look good what has not been liked by the market is that drop in EBIT for JLR, at 14.6% against an expected of 17%. More important, analysts have put in a figure of around 17.5-18% in next year’s projections which seems a little bit difficult right now.”

He further added, “There is a conference this evening, analyst meet which possibly will explain as to why these margins came as a big disappointment. The second problem is if you look at the April sales of JLR vis-à-vis March there is a 31% drop which was possibly ascribed to the seasonality factor, but if we have problems in Europe getting compounded further will the sales numbers which analysts have put in their projections as of now be attained with lower margins, that is the matter of concern. The point is the stock which people liked at Rs 280-285 coming down to Rs 250-255, is it a stock which one should be buying. The answer is the risk-reward is not right now in favor of rewards.”

“Honestly if you ask me maybe at around Rs 235-240, if it comes to that price I think Tata Motors would be a decent bet. I still feel among the four wheelers Tata Motors possibly qualifies as a best bet ahead of M&M which has also announced decent numbers today, but considering the price has already run up a little bit too sharply it’s reacted today, I think Tata Motors I would wait for some more time before going out to buy. Because ultimately my appreciation or my returns start from the price at which I am buying. At Rs 255 if I am buying and if I am seeing a target of Rs 290-300-310 in the next 12 months I think odds are not in my favor because I can also see a price of Rs 230-235. So better wait for that price. If it doesn’t come, doesn’t come. So that’s my call on Tata Motors.”