homemarket Newsstocks NewsHDFC Securities gives 'sell' on Tata Motors, cites margin, market share concerns
HDFC Securities gives 'sell' on Tata Motors, cites margin, market share concerns
In a dynamic automotive landscape marked by shifting market conditions and new challenges, Aniket Mhatre's decision to recommend selling Tata Motors draws attention to the company's weaknesses and areas of concern.
Aniket Mhatre, Institutional Research Analyst at HDFC Securities, has made a 'sell' call on Tata Motors, underlining concerns over the company's declining market share across segments in India and the margin sustainability of Jaguar Land Rover (JLR).
“They (Tata Motors) are losing market share, both in passenger vehicles (PVs) and commercial vehicles (CVs) for quite a few quarters now, which is also concerning given the stock up-move that we have seen, which leads us to a cautious view,” he told CNBC-TV18.
Analysts are divided on the stock's outlook with consensus largely favouring buying Tata Motors. In all, the stock has 28 buy recommendations, 3 hold recommendations, and 4 sell recommendations. The consensus target price currently stands at Rs 708.8.
Broking firm Motilal Oswal Financial Services anticipates that the commercial vehicle sector in India will experience a cyclical recovery, while the passenger vehicle sector is undergoing a structural recovery.
Jaguar Land Rover (JLR) is also expected to witness a cyclical recovery, largely due to a favourable product mix. However, potential supply-side issues might hinder the pace of this recovery.
Although there are no immediate catalysts expected for JLR, the Indian business, which constitutes around 50% of the sum-of-the-parts (SoTP), is set to continue its recovery.
Motilal has a buy on the stock with a target price of Rs 740 based on a September 2025 sum-of-the-parts valuation.
Axis Capital also has a ‘buy’ rating with a target price of Rs 830 based on a sum-of-the-parts valuation. Their confidence stems from several key factors: (1) a robust volume rebound and free cash flow generation within JLR, which is a pivotal catalyst for stock performance; (2) increasing volumes and margin enhancement in the commercial vehicle (CV) segment; and (3) the acceleration of volumes across various powertrains, including compressed natural gas (CNG) and electric vehicle (EV), in the domestic passenger vehicle business.
JLR Q2 Business Report
Retail sales of JLR, including the Chery Jaguar Land Rover China JV, rose 21% year-on-year (YoY) at 106,561 units for the second quarter ended September 30 (Q2FY24). The company had posted retail sales of 88,121 units in the same quarter previous fiscal.
Based on preliminary cash balances, JLR said it expects positive free cash flow of around £300 million in the second quarter of this fiscal.
For more details, watch the accompanying video
(Edited by : Shweta Mungre)
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