Why Tata Motors shares are under selling pressure?
“Carriage fee is now a well-regulated issue and it should be transparent. We will intervene if required but we won’t relook at the recommendations,” he said in an interview to NDTV.
Shares of Tata Motors traded with deep cuts Wednesday on account of weak auto sales in April. The company reported a 7 per cent fall in April sales at 60,086 units (year-on-year). It saw a sharp 40 per cent fall in sales as compared to March this year (month-on-month).
At 2.35 pm, the stock was down 3.3 per cent at Rs 306.35 on the BSE, while the Sensex traded 0.14 per cent higher at 17,343.
Shares of the company have witnessed a sharp rise over the last month on account of robust Jaguar Land Rover sales, the iconic British brands. JLR, the company’s luxury car brands, account for two-third of the company’s revenue and three-quarters of Tata Motors consolidated net profit. Over the last month (since April 02), Tata Motors stocks are up 10.75 per cent while the Sensex is down 0.5 per cent over the same period.
Analysts say the stock might be witnessing some profit booking after the sharp run up.
"Some profit booking is possible to 290 zone, where a lot of support emerges. The stock is a good buy at 290. Investors should hold the stock keeping 265 as a positional stop loss. The stock can reach 325-340 levels," Ashish Chaturmohta, VP, IIFL Wealth told NDTV Profit.
Brokerage firm Credit Suisse had come out with a neutral rating on Tata Motors last week. "Chinese demand and margins need to sustain for outperformance. The major concern is sustainability of margins in China. Global capacity additions could put margins under pressure. JLR & Cherry joint venture should take two years to be operational," Credit Suisse said in a note.
April sales a concern:
Passenger vehicle sales declined 7 per cent in the domestic market to 23,658 units from 25,436 units in April, 2011. Commercial vehicles segment recorded 6 per cent decline in domestic sales in April to 34,647 units, compared to 36,738 units in the same month year-ago. The company’s export declined by 35 per cent to 2,781 vehicles in April. Medium and heavy commercial vehicle sales stood at 9,829 units—29 per cent down compared to April, 2011.
(With inputs from PTI)