Sell Alert
Tata Motors (TTM)
from Global Investment Strategist, recommended as a Top Pick for 2012 around $21 on January 18, 2012.
Tata Motors (TTM) had a less-than-stellar quarter, reporting that passenger vehicle deliveries have dropped for 11 straight months due to weak domestic sales, with just 10,824 vehicles delivered in July. The company’s domestic plants that produce passenger vehicles are currently operating at just 60% of capacity, while commercial vehicle plants are operating at between 40% and 50% of capacity.
Net profit for the first quarter of the company’s fiscal 2014 came in at just INR17.3 billion, compared to INR22.5 billion in the same period last year, missing analysts’ expectations by just shy of INR5 billion. Net sales were up just 8% in the quarter. The situation could have been much worse were it not for Jaguar-Land Rover sales, which held steady in the quarter largely thanks to Chinese demand. But continued disappointing sales of Tata’s Nano, its signature passenger vehicle that helped vault the company to international recognition, were a drag on overall results.
With Indian automotive sales forecast to grow by about 5% this year—well below their 15.5% average of the past few years—Tata Motors is now a sell.
Benjamin Shepherd, Global Investment Strategist, www.globalinvestmentstrategist.com, 800-832-2330, August 7, 2013