Tata Motors corrects post denial of Tesla partnership; experts tell how to trade the stock now

Tata Motors witnessed a huge rally on speculations of a Tesla partnership last week. The stock was up 30 per cent. However, the company categorically denied any development and reiterated that passenger vehicle business restructuring had not been finalized. The stock saw a 6-6.5 per cent dip post the clarification. So, what is the outlook on the stock going forward?

Market Expert Prakash Diwan believes that Tata Motors approach to electric vehicles (EVs) in the Indian passenger vehicle (PV) segment is more holistic versus Tesla. "Tata Motors has been following a journey of its own. The format that they have chosen to expand into and they have been building on it for the last 18-24 months very actively. It includes dealership distribution, which involves a lot service issues, a lot of charging infrastructure that they are capable of doing given the group companies’ capabilities and battery manufacturing. So, I think the model is much more holistic as compared to Tesla. So would they want to open up their treasure chest and let Tesla just walk in and start getting a sound footing while it's a competitor? The answer is possibly not yet," he said in an interview to CNBC-TV18.

He recommended buying the stock at lower levels. "It is a great stock to buy at lower levels, not at the current levels because it is pricing in too much of exuberance at this point in time," he said.

Deven Choksey of KRChoksey Securities believes that Tata Group could be a good fit for Tesla. "Tata Motors kind of company which has got the manufacturing capability, could be a partner for Tesla as far as manufacturing of the car is concerned. At the same time, distribution, which though distributes to showrooms, but the recently found love for omni channel presence through the digital platform across the group products, could mean that digital-physical combining together eventually. So, ultimately it could be a good proposition. Tata Power could be a partner for battery and battery management system and Tata Capital for finance which is required for driving the entire growth. So, as I see it, Tata Group could possibly fit well into the entire proposition should Tesla decide to work under this model,” he said.