Dhananjay Sinha, Head-Institutional Research at Emkay Global Financial Services told CNBC-TV18, "Tata Motors has been our top pick, but it has actually been battered because of the disappointing numbers that are coming out of China and the China slowdown has actually impacted the near-term performance of the stock and also the results. So, in this quarter, we are expecting profits to actually decline by 45 percent year-on-year and because of the adverse geographical mix, the margins are also likely to be low."
"There is also a shift of production to the China joint venture that they have. So, that essentially also is a drag on the margins for the quarter and there might benefit from currency depreciation. If you look at pound and euro, both have actually been depreciating against the dollar. So, that is an incremental positive, but that will still be a very minor part of it," he added.
"On currency part itself it could contribute about 20-30 basis point increase in margin, but that will be counter-balanced by the other major factors. So, I think this quarter will be a drag for Tata Motors. From a long-term standpoint, if one has a one year view, we continue to maintain our positive bias in the stock," he said.
Disclosure: Analyst does not hav any holdings in the stock.
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