CLSA retains buy on Tata Motors

CLSA retains buy on Tata Motors

MUMBAI: CLSA has maintained a buy rating on Tata Motors with a target price of Rs 220 as the EU-UK deal has removed a key overhang on the stock.

The EU-UK Trade and Cooperation Agreement finalised on December 23 allows the free trade of goods.

“This removes a key potential risk for Jaguar Land Rover (JLR) which can now continue to export (and import) its vehicles between the UK and EU without additional costs. While free trade is now subject to rules of origin (RoO) requirements, we believe JLR should be largely compliant,” said CLSA.

The brokerage said investor focus is likely to shift back to Tata Motors’ volume and mix recovery as well as JLR’s cost reduction efforts.

CLSA continues to expect a sequential volume recovery for JLR coupled with cost and model rationalisation, which should drive free cash flow generation and deleveraging for Tata Motors.

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