INSUBCONTINENT EXCLUSIVE:
Analysts view a further decline of 5 per cent in Tata Motors shares as a good buying opportunityTata Motors shares declined further on
Tuesday, extending losses to the second straight day
Analysts say that concerns relating to the automaker's higher-than-expected capex for its subsidiary Jaguar Land Rover hurt the investor
Land Rover revealed plans of investment worth 13.5 billion pounds (around Rs 1.2 lakh crore) in the next three years
Investment will be 4.5 billion pounds per annum from FY19 to FY21 and subsequently targeted at 12-13 per cent of turnover, JLR said in the
investor presentation.The investments will be made on new models, technology, capacity with significant amount of it on electrification, and
on a new platform, modular longitudinal architecture (MLA)
The company also said it will launch four new models by FY24.Brokerage Edelweiss, in a research note, termed the capital expenditure higher
"Management commentary during JLR's investor day reaffirms our core concern on FCF (free cash flow) due to the higher-than-expected capex
Moreover, we perceive normalising margin in China as an incremental negative We appreciate JLR's efforts and capabilities on various
technological aspects, enabling it to now be at the forefront of disruption in the global automobile industry," it said.Jaguar Land Rover
has "effectively bridged the technological gap with peers over the past eight years, enabling it to be at the fore front of electrification
and adopt flexible manufacturing", said Edelweiss, which maintains a 'hold' call on Tata Motors shares.A K Prabhakar, head of research at
IDBI Capital, said Jaguar Land Rover's big capex plans led investors into a state of panic, leading to the recent fall in Tata Motors shares
He said investors were worried about the company's cash flow and top line due to the capex plans.Mr Prabhakar, however, believes the stock
can be a good buying opportunity below the price of Rs 250 (5 per cent from current levels).Tata Motors shares traded with heavy volumes on
289.40 on Monday, down more than 6 per cent from Friday's closing price of Rs 308."Technically, Tata Motors is still very weakno
term traders can still use any rally to create short positions for itinvestors can still wait for a confirmation and then only consider
buying it for long term."Tata Motors shares are trading below all important moving averages, which indicates that there may be further
bearishness in the short-term, said Rajesh Palviya, head-technical and derivative research at Axis Securities
"The stock is trading near its important support level of Rs 270-265
If the stock holds this support level then some pullback action can be seen from these levels
On the breakdown of Rs 265, it will resume its downtrend and it can slide further towards Rs 255-250 level in short term," he said."On the
higher side, Rs 305-315 are likely to act as stiff resistance for any minor pullback action in the near term."(With agency inputs)
