Tata Motors - Sell Report From IndiaBulls

Indiabulls has downgraded Tata Motors from hold to ‘sell’ after the company reported a decline in sales volume over the past few quarters.

cmp: Rs 153.10
target price: Rs 125

The broking house expects this trend to continue in the coming quarters, “given the slowdown in the economy, the cautious lending environment and a significant decline in consumer spending.”

Also Read: Tata Motors Downgraded by S&P Investment research

Indiabulls feels that the biggest challenge for Tata Motors currently is to turn around its Jaguar Land Rover (JLR) business, for which it raised a bridge loan of $3 billion. “Given the tight liquidity scenario and bleak capital markets, Tata Motors is likely to roll over its bridge loan, thereby adding to the company’s finance cost,” says the report. Further, JLR’s sales volume is trending downwards, and given the current economic conditions in the US and Europe, we do not expect volumes to recover in the near term, it adds.