The wheel on a Jaguar Land Rover Automotive I-Pace Electric Concept luxury sports utility vehicle (SUV) is seen during an event in Los Angeles, California, U.S. (Photographer: Patrick T. Fallon/Bloomberg)

CLSA Says ‘Sceptical’ Of Tata Motors’ Domestic Business Turnaround

Brokerage house CLSA is sceptical of a turnaround in Tata Motors Ltd.’s business any time soon.

Earlier in the month, Tata Sons Chairman Natarajan Chandrasekaran said the automaker has chalked out an elaborate plan in its bid to turn around its loss-making Indian unit and the business is a "priority" at the group level.

However, CLSA said even if such a turnaround were to happen, the fair value is seen at Rs 420 a share, which close to current market price.

It anticipates challenging times ahead for Jaguar Land Rover given the softening luxury auto demand in the Western markets and a skeptical outlook towards turnaround in the Indian market.

JLR’s underlying margins, including forex, are likely to remain under pressure on the back of rising incentives, weakening product mix and an ageing portfolio.

JLR’s volume growth has decelerated sharply in the financial year 2017-18, despite new launches. Recently launched mid-sized luxury sports utility vehicle, ‘Discovery’ has seen a lukewarm response too, said the brokerage said, adding to the pessimism.

The broking firm maintained its ‘Sell’ rating on Tata Motors, with a moderate hike in target price to Rs 395 from Rs 380 earlier, reflecting a downside of nearly 7 percent to the last price.

The target price hike in Tata Motors factors in the anticipated lower losses for the Indian unit and a stronger British pound relative to the rupee.