The share price of Tata Motors fell 6 percent on Wednesday after the firm’s March quarter results missed estimates. The firm reported a narrowed net loss of Rs 7,585 crore for the quarter ended March 31.
Having a bullish view on the stock, Mitul Shah of Reliance Securities said, “We are taking long term 2-year view wherein we are finding number parameters which are in favour starting with the domestic industry wherein commercial vehicle is ready for up move. In fact, we expect a strong upcycle already starting for MHCVs. We expect close to 100 percent kind of growth for that industry and Tata Motors is the leader with above 50 percent market share will certainly benefit from this.”
Shah also said that Tata Motors has doubled its market share in the domestic passenger vehicle side from 4 percent to 8 percent in a single year with limited products.
“Passenger vehicle side the company reported first time positive EBIT with EBIT of around 5 percent. This industry is also expected to report decent growth wherein because of the market share gain, the company will outperform strongly,” he said.
He said that the company has improved market share for JLR also in the last quarter; from close to 1 percent it has improved to 5 percent market share.
However, market expert Prakash Diwan has a bearish view of the stock. “The disappointment today in the stock is because the expectations going into earnings was very high. The second thing is that the management has not only sounded conservative, but they have also sounded extremely cautious of the fact that this disruption in the current quarter could show much more muted numbers for them all across,” he said.
He said that the company may see topline growth but profitability and margins will not be great.
“Given the kind of valuations that JLR is continuing to get in spite of the stress that is there in the overseas business, revenue will come at the cost of margin compromise. Even in the US if things look up, the inflationary trend very clearly tells you that the pricing power is still some time away. So, everywhere you will see topline growth but probably not great profitability and margins,” he said.
However, he believes that one could buy the stock at lower levels at around Rs 250-260.
Watch the video for more.
Disclaimer: The views and investment tips expressed by investment experts on CNBCTV18.com are their own and not that of the website or its management. CNBCTV18.com advises users to check with certified experts before taking any investment decisions.