MUMBAI: CLSA has retained sell rating on Tata Motors with a target price of Rs 295.
The brokerage remains concerned on Tata Motors' arm JLR given a weak volume outlook, rising competition in SUVs and cash flow pressure.
"Narrowing hedging losses should boost its earnings growth in FY19 but we continue to see operational headwinds for its margin," said CLSA.
JLR also targets a better margin with internal cost controls and operating leverage although CLSA believes the benefit from the latter will be limited given weak demand.
CLSA said JLRs cash flow should also remain under pressure in FY19-FY20 due to its large investment needs.
"We remain negative on JLR given multiple headwinds for the stock which are unlikely to be offset by its smaller-sized India business.
The stock (of Tata Motors) is still at a 10x FY19CL PE, which is not cheap given BMWs and Daimlers multiples have contracted to 6x-7x," said CLSA.