Tata Motors shares slump by nearly 6% as UBS maintains sell rating
Tata Motors shares dropped by nearly 6% on September 11 due to UBS maintaining its sell rating. UBS cited potential risks in Jaguar Land Rover and the domestic passenger vehicle segment. Analysts see short-term weakness in the stock but advise long-term investors to hold onto it.
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Tata Motors shares slump by nearly 6% as UBS maintains sell rating
Tata Motors shares slump
On September 11, Tata Motors’ shares dropped nearly 6%, positioning it among the biggest decliners on the Nifty 50. By 11:30 am, the stock was down 5.57%, trading at Rs 977.80 on the Bombay Stock Exchange (BSE). This decline reflects investor concerns after UBS Securities maintained its ‘sell’ rating on the company. UBS highlighted potential risks, including margin pressure in Tata Motors’ luxury brand Jaguar Land Rover (JLR) and challenges in the domestic passenger vehicle segment.
UBS maintains sell rating
UBS Securities maintained its price target for Tata Motors at Rs 825, indicating a potential 20% drop from the previous close. The brokerage expressed caution, noting that Jaguar Land Rover’s (JLR) recent success with premium models like the Defender, Range Rover, and Range Rover Sport is waning. UBS pointed out that the order book for these models has returned to pre-pandemic levels, with expected increases in discounts on the Range Rover. “The concern is whether investors should worry as JLR discounts rise,” UBS wrote, suggesting this could impact Tata Motors’ profitability due to reduced demand for JLR’s high-end vehicles.
JLR’s strong sales have significantly contributed to boosting Tata Motors’ average selling price, but weakening demand for its premium models could put pressure on profit margins. Kranthi Bathini, Director of Equity Strategy at WealthMills Securities, commented that Tata Motors shares have been consolidating after reaching all-time highs.
Analysts see short-term weakness
Tata Motors shares slump by nearly 6% as UBS maintains sell rating: Kranthi Bathini emphasized that a major concern for auto manufacturers in the near term is rising inventories at dealerships, which could pressure profit margins. He also highlighted Tata Motors’ strong position in the electric vehicle market and noted that Hyundai Motor India’s upcoming IPO will increase visibility in the automotive sector. Bathini advised long-term investors to hold onto the stock, expecting growth over the medium to long term. He identified key support levels for Tata Motors at Rs 976, with further support at Rs 960, Rs 950, and Rs 940.
Osho Krishan, Senior Research Analyst at Angel One, pointed to the stock’s technical weakness after recent declines. He indicated that the ongoing sell-off is creating further downside, with intermediate support around the Rs 980-960 range and further support near Rs 940. Resistance levels were noted between Rs 1010 and Rs 1030.
Ravi Singh, Senior Vice-President at Religare Broking, also saw short-term weakness in the stock, advising a buy-on-dip strategy around Rs 920, with a potential upside target of Rs 1,000.
Tata Motors cuts EV prices
Tata Motors recently introduced substantial price reductions across its electric vehicle (EV) range as part of its “Festival of Cars” campaign, which runs until October 31. The initiative aims to make EVs more accessible and accelerate their adoption in India. Tata Motors emphasized that these discounts would help bring electric vehicles into the mainstream. Additionally, customers purchasing an EV during this promotion will enjoy six months of free charging at over 5,500 Tata Power stations across the country, enhancing convenience for both city and long-distance travel at no extra cost.
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