Tata Motors gains 4%, nears 52-week high on strong December sales data

In the past three months, Tata Motors' stock has gained 43 per cent
Shares of Tata Motors rose 4 per cent to hit an over 11-month high of Rs 193 on the BSE in Monday's early morning trade after the company reported a 21 per cent increase in total vehicle sales in the domestic market to 53,430 units in December.

The stock of commercial vehicles was trading close to its 52-week high of Rs 201.80 touched on January 15, 2020. In the past one week, Tata Motors has gained 9 per cent, as compared to a 2.4 per cent rise in the S&P BSE Sensex. In three months, it has rallied 43 per cent against 24 per cent gain in the benchmark index.

Tata Motors’ commercial vehicle (CV) domestic sales in the October-December quarter (Q3FY21) stood at 82,155 units, up 48 per cent against the previous quarter, the company said in an exchange filing, post market hours on Friday. The sales were broadly in line with the figure posted in Q3FY20 (- 3.5 per cent).

M&HCVs and ILCVs led the recovery, growing by 10 per cent and 7 per cent, respectively over Q3FY20 with higher demand in infrastructure, including road construction, mining and e-commerce segments. The offtake continued to be higher than retail to support sequential month on month growth in retail while ensuring healthy inventory levels in the pipeline, the company said in a press release. READ HERE

The passenger vehicle (PV) industry continued to grow robustly in Q3FY21, owing to pent up demand, strong festive season and shift towards personal mobility. Tata Motors PV business has been witnessing strong response for its ‘New Forever’ range, which is being supported by the continuous ramp-up of supplies.

In Q3FY21, PV business posted a growth of 89 per cent as compared to Q3FY20, its highest ever sales in the last 33 quarters. With the growing popularity of Nexon EV, the company also posted an impressive sale in EVs with highest-ever quarterly wholesale of 1,253 units in Q3FY21 and 418 units in December 2020, it said.

"Tata Motors has taken cognizance of the increasing debt levels at the company amid deteriorating operating performance and recurring capex spend on new technologies, including electrification. It plans to reduce automotive debt to near-zero levels in the next few years (~ Rs 48,000 crore as of FY20) and be FCF positive from FY22E onwards, which, we believe, will drive value creation for its shareholders," ICICI Securities said in auto sector update. We are positive on the company’s longer-term strategic direction (electrification and deleveraging), the brokerage added.

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