Tata Motors jumps 51% in Jan on Tesla tie-up buzz; firm denies rumour

Shares of Tata Motors continued their northward march, with the stock hitting its fresh 28-month high of Rs 278, up 7 per cent on the BSE in the intra-day trade on Wednesday. The rally was supported by massive volume-based buying.

At 02:58 pm, Tata Motors was trading 6 per cent higher at Rs 275 on the BSE, as against a 0.91 per cent rise in the S&P BSE Sensex. A combined 199 million equity shares had changed hands on the counter on the NSE and BSE till the time of writing of this report.

The stock of the Tata Group commercial vehicles company was trading at its highest level since September 2018. The stock has managed to hold investor interest despite denying reports that it’s planning to sell its stake in the domestic passenger vehicle (PV) business. In the past seven trading days, the stock has rallied 26 per cent on report that Tesla may choose Tata Motors for its much-awaited India foray.

"Tata Motors has not taken any decision regarding a strategic partner for its PV business and categorically denies any and all rumours suggesting the same," Tata Motors said on January 12, in exchange filing.

Meanwhile, thus far in the month of January 2021, the stock of Tata Motors has rallied 51 per cent after the company's subsidiary Jaguar Land Rover (JLR) posted a second successive quarter-on-quarter (QoQ) recovery in sales, despite the continuing impact of Covid-19. In comparison, the S&P BSE Sensex gained 4.4 per cent so far in the month.

For the calendar year 2020, JLR retail sales were down 23.6 per cent on 2019, reflecting the industry impact of Covid-19 particularly in the first half of the year when plants were shut down for more than two months. However, the company has since seen sales increase QoQ by over 53 per cent in the quarter ended 30 September, followed by the 13.1 per cent increase in the most recent quarter.

Tata Motors PV Business has also been witnessing strong response for its ‘New Forever’ range, which is being supported by continuous ramp up of supplies. In Q3FY21, PV business posted a growth of 89 per cent as compared to Q3FY20- highest ever sales in last 33 quarters. With the growing popularity of Nexon EV, the company also posted an impressive sale in electric vehicles (EVs) with highest ever quarter wholesale of 1,253 units in Q3FY21 and 418 units in December 2020.

Most of the brokerage houses upgraded Tata Motors stock as analysts believe the OEM will benefit from an improving demand outlook, cost-cutting initiatives, and better free cash flow (FCF) generation. JLR’s retail volumes are improving from COVID lows, and system inventories are normalising. The loss-making India PV business has turned the corner and reported a positive margin, driven by robust market share gains. This will improve domestic cash flows and make the PV business more attractive for potential partners, they said.