File photo of Tata Motors.

Tata Sons Increases Stake In Tata Motors 

Tata Sons Ltd. bought shares of Tata Motors Ltd. third time in the last 14 months as it continues to increase promoter holding in its automotive arm.

The parent of salt-to-software Tata Group acquired nearly 2.61 crore shares from the open market at an average cost of Rs 255.8 apiece, according to data available on exchanges. In all, Tata Sons bought 1.05 percent stake for Rs 670 crore on Aug. 13 and 20.

The transactions increased the parent’s holding in the automaker to 33.40 percent from 25.22 percent in 2015, according to exchange data. Tata Sons has been increasing stake in the company since 2015 by participating in rights issues and mopping up shares from the open market. In the recent past, the group holding company also increased its stake in its steel subsidiary Tata Steel Ltd.

Share purchase by promoters is usually considered as a positive signal about the prospects of the company, boosting the stock price. While Tata Motors did see an immediate spike, its shares are trading close to its lowest in six years. The stock has fallen 40 per cent so far this year, making it the worst performer on the S&P BSE Auto Index

Of the 42 analysts tracking Tata Motors, 29 have a ‘Buy’ rating and the average 12-month target price is at nearly Rs 361 per share—an upside of 40 percent, according to Bloomberg data.