Tata Motors’ Sales Go Down, Stock Price Goes Up

Tata Motors, the Flagship Company of the Tata Group came out with its sales number for the month of January 2013. Although the overall sales unit is down by almost 16% on a yearly basis to 101112, the stock price of Tata Motors is up by nearly 3% in today’s trade. The reason for such a rise is the increase in the sales of Jaguar Land Rover (JLR).

The sales of JLR have increased by 30% on a yearly basis to 38173 units for January 2013. The total sales of Jaguar for the month were 6440 and it was 31733 for the Land Rover, JLR is now a major contributor to the financials of Tata Motors and constitutes more than 65-70% of Tata Motors’ consolidated revenues and accounts for more than 90% of the company’s consolidated profits. Therefore, any improvement or deterioration in the JLR numbers will have disproportionate impact on the scrip price of Tata Motors. We have seen earlier that the stock was hammered a couple of weeks ago due to concerns of the management regarding the margin forecast of JLR.

Going forward, we believe that the auto sector as a whole is going to perform in the next 18 months time horizon and Tata Motors being the major player in the sector, will remain the top performer.