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Tata Motors Drops After Brokerage Downgrades Rating to Sell; Top Loser in Nifty

By Malvika Gurung — A day after climbing over 3%, backed by strong sales figures reported for Dec 2021 and the quarter ending Dec 2021, shares of the auto major Tata Motors (NS:) have dropped over 2% to Rs 487.3 at 12:03 pm on Tuesday.

The auto stock has emerged as the top loser in while drafting this report.

The stock decline has come after the foreign brokerage CLSA downgraded its rating on Tata Motors from ‘Buy’ to ‘Sell’, and has revised the target price to Rs 408/share, which is a downside of 16.2% compared to the stock’s current price.

The brokerage is of the view that the domestic PV business is overvalued and has set the valuation for this business segment at Rs 99/share.

It also believes that the auto major’s subsidiary Jaguar Land Rover is lagging in electrification compared to peers. CLSA has set the valuation for TaMo’s commercial vehicles business to Rs 150/share, and JLR business to Rs 151/share.

The brokerage expects a recovery in the volume and profit figures of JLR, with an improvement in availability of chips globally. It pegs the company’s domestic CV business to grow strong in 3 years. 

Tata Motors reported a 26.2% rise in its total vehicle sales in the quarter ending December 2021, on a YoY basis. A total of 1,99,633 vehicles were sold in Q3 FY22 in the domestic as well as international markets, compared to 1,58,218 units sold in the same period last year.

Read More : Tata Motors Drops After Brokerage Downgrades Rating to Sell; Top Loser in Nifty

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