Tata Motors gains on value buying

The stock was up 2.5% after falling nearly 8% in past two trading sessions on the National Stock Exchange.

Tata Motors is trading higher by 2.5% at Rs 369 on value buying, after falling nearly 8% in past two trading sessions, as the company said luxury unit Jaguar Land Rover (JLR) would increase its capital spending for the financial year 2015.

The stock opened at Rs 363 and touched a high of Rs 370 on the NSE. A combined around 3.38 million shares have changed hands on the counter till 1040 hours on the BSE and NSE. The past two sesions have seen the counter tumble 7.7% in past two trading sessions from Rs 391 to Rs 361 compared to 1.5% fall in CNX Nifty.

JLR is in the process of expanding geographical reach along with launch of new products at regular interval. JLR’s indication of increasing capex indicates Company’s long term vision of expanding foot print and establishing brand name along with its peers, says analyst at Karvy Stock Broking in a report.

However, its higher capex plan is above street’s estimates, though analyst sees it as an investment towards profitable growth, which is already visible in Company’s improving monthly volumes.

Analyst reiterate “BUY” recommendation on Tata Motors with target price of Rs 462 per share as the broking firm believe that these initiative would aid Company’s volumes as well as help maintaining healthy margins going forward.