Religare maintains 'buy' on Tata Motors, target Rs 350

Brokerage house Religare has retained its "buy" rating on Tata Motors  citing steady growth in monthly retail sales of its Jaguar and Land Rover luxury brands. The firm has a price target of Rs 350 per share.

Jaguar Land Rover's retail sales last month increased 12 percent YoY, best ever for May. However, parent Tata Motors' global wholesales in May were disappointing (down 18 percent). There was only a marginal rise in JLR wholesales.

"JLR's wholesale and retail volumes have increased by 9 percent and 12 percent respectively. Sustained momentum in the Chinese market and new product launches suggest a healthy volume run-rate in the months to come," says the Religare note to clients Monday.

"We forecast 422,500 units for FY14 (a growth of 14 percent year-on-year). Further the improving product and market mix should aid margins in FY14. We recommend buying the stock on any declines owing to lower-than-expected May wholesale volumes," says the Religare note to clients.

Shares of Tata Motors were trading at Rs 293.20, down Rs 3.90 or 1.31 percent.

Don't fool yourself! Diesel cars aren't price-efficient anymore...

Riken Mehta
Moneycontrol.com

Although the monthly 50 paise increment in diesel prices has managed to bring down under-recovery of oil marketing companies to some extent, it has impacted the auto industry negatively as far as sales of diesel vehicles are concerned.

In May last year, the difference between petrol and diesel rates was as high as Rs 33 with the latter commodity available at Rs 46 a litre. This led to boost in sales of diesel vehicles. But with continuous hike in diesel prices, the difference between the two has come down to Rs 14 which has effectively chased away buyers of diesel cars.

Mahindra and Mahindra (M&M) is one such industry player struggling to sell diesel vehicles. Speaking to CNBC-TV18, Pravin Shah of M&M admitted the industry was seeing de-growth in SUV sales on higher diesel prices. The excise duty of 3 percent levied on the SUVs by Finance Minister also impacted sales to certain extent. With the difference in petrol and diesel prices getting narrowed, sales of diesel vehicles will take a beating in the coming future.

Chart of the day: Maruti stock’s performance during labour unrest in 2011

Riken Mehta
Moneycontrol.com


Here is how Maruti shares fared during the labour unrest that began on June 4 last year, and which continued in phases before it was finally resolved on October 20. The stock shed around 13% and the company suffered an output loss of over 1 lakh vehicles. It is not clear how long the latest bout of worker problem will last. But it comes at a time when sentiment for the sector as a whole is weak because of falling demand. So far this calendar, Maruti shares have risen 21% compared to a 13% rise in the BSE Auto index.

See the chart below. Chronology of Events: A-F