Feb 18, 2013, 10.45 AM IST
Sell Tata Motors, says Gautam Chhaochharia, UBS India.
Sell Tata Motors , says Gautam Chhaochharia, UBS India.
Chhaochharia told CNBC-TV18, "We still do not like Tata Motors. We still have a sell on the stock. I think the earnings estimates are factoring in the best case scenario of all the new models in Jaguar Land Rover (JLR) doing well and then margins sustaining as well as a very quick recovery in the local Commercial Vehicle (CV) cycle. I think both of these seem unlikely or the best case scenario to us while a more reasonable case scenario will be slightly below what the Street is factoring in."
He further added, "The stock is trading at a premium to where Audi and BMW are trading at. You could argue that Tata Motors had higher growth, but on the other hand you do have lesser visibility in terms of free cash flows because of the capex cycle which they have laid out for JLR. So keeping that in mind the valuation premium seems at best unjustified. So at this price the risk-reward is clearly unfavourable in our view."
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