The Tata Motors stock hit a 52-week high on October 7, shooting past Rs 369.60. The spike comes a day after Tata Sons Chairman N Chandrasekaran met Tamil Nadu Chief Minister MK Stalin, who is believed to have invited the conglomerate to take over the Ford plant near Chennai.
Ford has started winding up vehicle manufacturing at both Tamil Nadu and Gujarat plants as part of its restructuring exercise. It involves phasing out the current generation of Ford cars from the Indian market.
Stalin made the request to Chandrasekaran after the carmaker proposed to suspend manufacturing at its Chennai outfit that would trigger large-scale job loss.
When contacted a Tata Motors spokesperson confirmed the meeting between Chandrasekaran and Stalin but refused to divulge details of the discussion.
“We continue to explore possible alternatives for our manufacturing facilities but have nothing further to share related to the speculations,” a Ford India spokesperson responded to a query from Moneycontrol.
Tata Motors has become an outlier in the passenger vehicle (PV) industry, posting growth in sales every month even as its competitors are forced to shut production to parts shortages. The Mumbai-based company is running its PV plants in double shifts following strong demand.
Further scaling up of production is restricted because of crunch in supply of semiconductors. Tata Motors’ total installed capacity for passenger vehicles in India stands at 500,000 units a year.
As per data shared by Tata Motors, its September quarter PV volumes jumped 51 percent to 81,229 units as against 53,870 units sold in the same period last year.
While Tata Motors does not have any manufacturing presence in Tamil Nadu, its Gujarat plant, based in Sanand, is right next to Ford’s vehicle making plant. Tata Motors makes Tiago and Tigor at the Gujarat factory. Ford has held talks with a number of auto companies for selling both its plants.
Morgan Stanley has meanwhile upgraded Tata Motors to ‘overweight’ in its report released on October 7 on the basis of a positive outlook for its Jaguar Land Rover, commercial vehicle and passenger vehicle businesses.
“As India's auto cycle emerges from multi-year lows, we believe Tata Motors will see the highest operating and financial leverage gains. Market-share wins in India's passenger vehicle and commercial vehicle businesses could also re-rate the name from a global luxury play to a global and India play. In our bull case, Tata Motors reaches zero net debt by 2024, while India PV and CV multiples go close to peers, driving about 84 percent upside in the name. Our base case assumes Rs 158 billion net debt by FY24,” said the report.
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