Tata Motors hits two-month high on strong JLR sales in July

JLR reported a strong 21% yoy jump in global sales of 31,611 units in July.

Tata Motors has surged 7% to Rs 312, its highest level since June this year on BSE, after Jaguar Land Rover (JLR) reported  a strong 21% year-on-year (yoy) jump in global sales of 31,611 units in July. 

JLR sold 2,41,801 vehicles in the first seven months of 2013, a 15% increase over the same period last year, JLR said in a statement.

The stock opened at Rs 296 and has seen a combined 8.47 million shares change hands on the counter till 1135 hours.

The auto stock has outperformed the market by surging 12% in past four trading sessions as compared to 3.3% rise in benchmark S&P BSE Sensex, after JLR registered a robust performance for the quarter ended June 30, 2013.

JLR witnessed a strong margin expansion of 200bp year-on-year to 16.5% on the back of superior product and geography mix, favorable currency impact and also due to softening of the commodity prices.

Analyst at Nomura upgrades Tata Motors to ‘buy’ (from neutral) with a target price of Rs 327 (earlier Rs 323).

Analyst believes volume growth for JLR is likely to remain robust in FY14f, led by strong growth in China and successful new launches. Margins should remain strong given favourable currency movements, strong product/geographic mix and higher volumes.

“We expect JLR to sustain its strong performance driven by continued momentum in the global luxury vehicle market and aided further by the strong product launch pipeline and the success of the model launched in Q4FY2013,” says analyst at Angel Broking in report dated Aug 8.

Analyst retain positive view and Buy rating on the stock with target price of Rs 355, however expects headwinds in the standalone business to continue in FY2014 due to weak macro-economic environment which is expected to continue impacting domestic volumes.