Is the worst over for Tata Motors? Here‘s what analysts feel

Moneycontrol NewsTata Motors has seen selling pressure in the recent past, posting a fall of over 13 percent in the past one month. Analysts, however, are optimistic on the stock going forward on the back of strong pipeline of products, better hedge rate and operating leverage at play. They also see improvement in JLR’s margins from June quarter. Credit Suisse has an outperform rating on the stock with a target price of Rs 630. The analyst firm believes that newly-launched Velar will plug the gap between Evoque and RR Sport. Furthermore, its sales could be 1,00,000 units per annum. Motilal Oswal has maintained its buy call on the stock with a target price of Rs 653. It believes the worst is over for the stock after two years of turbulence. Things are falling in place for JLR and India business, the analyst firm feels. JLR’s volumes are could grow at CAGR of 19 percent over FY17-19, driven by 14 percent CAGR for Land Rover and 31 percent CAGR for Jaguar. This is likely due to launch of two new models along with six major refreshes. The key lies in its passenger vehicles (PVs) business which can potentially break even on the back of favourable product pipeline, it said. This implies 6-7 percent accretion to its FY19E SOTP. On financials, Credit Suisse expects FY18 to be a strong year. “JLR margin should see sharp improvement June quarter onwards,” the analyst firm wrote in its report. However, potential US border tax is a key risk to the stock, it added. Meanwhile Motilal Oswal conservatively estimates 550 basis points (bps) expansion in EBITDA margin over FY17-19. This may be driven due to favourable forex and operating leverage.