Daimler exit drives down Tata Motors

The Tata Motors stock slipped 2.5 per cent on Tuesday following the exit of Daimler AG. After touching a low of Rs 777.85, the stock closed at Rs 776.05 against Monday's close of 797.65.

Daimler sold its entire 5.34 per cent stake in Tata Motors, at a time when the stock was ruling near a 52-week high of Rs 842 on the BSE.

The 2.56 crore shares were sold at a weighted average traded price of Rs 751.67 a share, according to the Bombay stock exchange's website.

Tata Sons Ltd and Citigroup Global Markets Mauritius Pvt. Ltd bought Tata Motors shares from Daimler, according to Bombay stock exchange data.

As of December 2009, Tata Sons was holding 33.8 per cent stake in the company. Recently, Tata Sons bought 36.9 lakh shares in Tata Motors from Tata Steel, which held 3.79 crores or 7.9 per cent in the auto major.

Stock Rise

Tata Motors stock has been on the rise in the last 10 days, after the company announced that its Jaguar Land Rover unit returned to profit.

According to a CLSA report, “Tata Motors' 3Q consolidated results surprised positively with JLR's PAT at £ 55 million coming in almost 3x our estimates. The pace of improvement in JLR's volumes and profitability in 3Q was much higher than what we were expecting and we expect this to sustain in FY-11.”

CLSA upgraded the stock to ‘Buy' with a price target of Rs 910.

“The strong improvement in JLR's performance has been better than expected. Consequently, a further improvement in the JLR volumes on the back of a global recovery and improvement in the profitability on higher scale of operations and reduced cost is likely to improve the consolidated performance of the company,” said a Sharekhan report.

Source : Business Line (Online Edition) (3/10/2010)