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Tata Motors gains as tech arm eyes first IPO from the Group since TCS in 2004

Tata Motors gains as tech arm eyes first IPO from the Group since TCS in 2004

Tata Motors gains as tech arm eyes first IPO from the Group since TCS in 2004
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By CNBCTV18.com Jul 8, 2022 4:58:49 PM IST (Updated)

Tata Motors share price settled 2.5 percent higher at Rs 441.60 apiece at closing on Friday. The scrip recovered from the day's low of Rs 429.50 on BSE, after opening at Rs 436.10 from its Thursday's closing price of Rs 430.80.

Tata Motors share price settled 2.5 percent higher at Rs 441.60 apiece at closing on Friday. The scrip recovered from the day's low of Rs 429.50 on BSE, after opening at Rs 436.10 from its Thursday's closing price of Rs 430.80.

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The sentiment in the Tata Group auto stock improved after a Moneycontrol report said that Tata Motor's subsidiary Tata Technologies had initiated preliminary steps to evaluate an initial public offer (IPO) on the back of rising demand in electric vehicles and the aviation segment. The MC report added that Tata Tech has already onboarded Citi for the IPO. The IPO could be the first from the Tata Group since TCS in 2004.
Experts also believe that investing in the stock can turn out to be fruitful for investors.
"I remain constructive on Tata Motors and I would say that the current correction affords investors an opportunity to start buying into the stock with a target price of around Rs 550 to around Rs 530 levels with a 12 to 15-month perspective." Market Expert Ajay Bodke told CNBCTV18.
Despite whatever is happening in Europe there is still a good chance of an upside in Tata Motors stock performance.
"We can witness a significant upside in Tata Motors, like as far as like an immediate technical target is concerned for Rs 460 is what we are doing. But given the way the entire auto sector has performed, I think there is a lot of headroom in Tata Motors, and one can stay long in this with a stop loss of around Rs 410 to be precise," Rahul Sharma, Market Technical Expert, JM Financial Services told CNBCTV18.
He further added that stock performance is likely to improve more in the future.
The sentiment was further aided by declining trends in metal prices amid robust domestic sales although a 37 percent decline in retail sales of Tata Motors-owned, Jaguar Land Rover (JLR) in the April-June quarter, weighed down the auto stock in early trade.
The sentiment was further aided by declining trends in metal prices amid robust domestic sales although a 37 percent decline in retail sales of Tata Motors-owned, Jaguar Land Rover (JLR) in the April-June quarter, weighed down the auto stock in early trade.
JLR sales fell by 37 percent to 78,825 units in the June quarter, as a result of a shortage of semiconductors, COVID-19 lockdowns in China, and the transition to the new Range Rover Sport model. The sales of the Jaguar brand were down 48 percent at 15,207 units in the April-June period of 2022, while that of Land Rover was also lower by 33 percent at 63,618 units.
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"Despite a record order book, sales continue to be constrained by the global chip shortage, compounded by the run out of the prior model Range Rover Sport, with deliveries just starting, and the impact of Covid lockdowns in China," JLR said in a statement shared on bourses by Tata Motors.
JLR, however, claimed that there is still a high demand for its products, with global retail orders once more breaking records in the quarter. The whole order book increased by about 32,000 orders from March 2022 to about 2 lakh units as of June 2022, it added.
The company reported that with almost 62,000 orders, the new Range Rover saw particularly strong demand. With 20,000 and 46,000 orders, respectively, the new Range Rover Sport and Defender are following a similar pattern.
On July 5, Addressing shareholders during the company's 77th annual general meeting, Tata Motors Chairman N Chandrasekaran said that the global shortage of semiconductors had a disproportionately adverse impact on Jaguar Land Rover's production and sales.
"We are committed to restoring the profitability of this business as it returns to competitive growth and inflation stabilises," Chandrasekaran added.
He also mentioned that the company is making rapid progress in developing the Battery Electric Vehicle (BEV first Electrified Modular Architecture (EMA) platform for the new Land Rover products and is hoping for a gradual recovery in performance in the second half of the current fiscal.
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