Tata Motors slides as foreign brokerage cuts target on China growth concerns

Tata Motors fell 3.45% to Rs 431.05 at 14:31 IST on BSE on reports a foreign brokerage has cut its target price on the stock citing lower China volume growth.

Meanwhile, the S&P BSE Sensex was down 364.98 points or 1.36% at 26,475.52.

On BSE, so far 10.66 lakh shares were traded in the counter as against average daily volume of 4.95 lakh shares in the past one quarter.

The stock hit a high of Rs 449 and a low of Rs 428.65 so far during the day. The stock had hit a 52-week low of Rs 422.63 on 17 June 2014. The stock had hit a record high of Rs 605.57 on 3 February 2015.

The stock had underperformed the market over the past one month till 10 June 2015, sliding 13.06% compared with Sensex's 0.98% fall. The scrip had also underperformed the market in past one quarter, declining 19.45% as against Sensex's 6.51% fall.

The large-cap company has equity capital of Rs 577.47 crore. Face value per share is Rs 2.

The foreign brokerage reportedly reduced target price on the Tata Motors stock but reiterated a buy rating with a view that current weakness is an opportunity to enter. It has also cut FY 2017-18 earnings per share (EPS) by 11% factoring in lower China volume growth and a 50% contraction in Jaguar Land Rover's (JLR) China margin premium over other regions, as per reports.

According to reports, the brokerage believes the stock is pricing in a very pessimistic China scenario and the strong company-specific story in JLR/India is being ignored, it added. The brokerage further says that Chinese luxury auto demand has weakened and the premium pricing enjoyed by luxury auto OEMs in China is also softening, as per reports.

Tata Motors' consolidated net profit declined 56.2% to Rs 1716.50 crore on 4% growth in net sales to Rs 67297.99 crore in Q4 March 2015 over Q4 March 2014.

Tata Motors is India's largest automobile company. Through subsidiaries and associate companies, Tata Motors has operations in the UK, South Korea, Thailand, South Africa and Indonesia.

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