Tata Motors fully valued, buy at around Rs 350: Banerjee

Dec 12, 2013, 06.02 PM IST

Basudeb Banerjee of Quant Broking is of the view that one may buy Tata Motors at around Rs 350 apiece. "From short-term perspective, Tata Motors is fully valued at Rs 400, better wait for Rs 350 or below levels to make a fresh entry," he adds.

Tags Basudeb Banerjee, Quant Broking, Tata Motors

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Tata Motors fully valued, buy at around Rs 350: Banerjee

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Basudeb Banerjee of Quant Broking told CNBC-TV18, "Mercedes-Benz sales somewhere around 0.4 million units per quarter globally whereas Jaguar Land Rover (JLR) is selling 0.4 million per annum globally. So the scale is yet on a nascent level. The whole story of JLR started really 3-4 years back. Whenever you are willing to put your global footprint in markets like China, Brazil you need to have some local capacity. You cannot source the finished materials from UK and sell them globally across markets. So in this stage of the business cycle hefty capex to sales is necessary for JLR and management has been saying that be ready for such negative surprises."

He further added, " Tata Motors moved up from those Rs 320-330 levels to Rs 400 just because of the market frenzy where no positive surprise came from the business per se. So that rationalisation was due and we were anyhow saying from a short-term perspective that Tata Motors is fully valued at Rs 400, better wait for Rs 350 or below levels to make a fresh entry."

"One more thing one should take note is pound-dollar movement. Last quarter it was around 1.55, presently it is around 1.64, almost a 5 percent adverse move. So 50 percent of revenue coming from dollar denominated. I will not be surprised if there is a 150 bps margin deterioration QoQ, so that is another negative aspect which is waiting in Q3 results other than poor standalone performance continuation. So combining all those three things this correction is highly logical and some more correction is also awaited. So around Rs 350 levels it will be a good buying opportunity looking at FY16 growth opportunities in perspective," Banerjee said.

Harmonis Hubungan