India Watch : Merrill Lynch say Tata Motors likely to remain on growth path
The Hindu, 22nd June, 2009
Tata Motors is likely to remain on its growth path as the strength of its domestic operations would more than offset the weaknesses at Jaguar Land Rover, which itself could see a recovery in sales by next year, brokerage firm Merrill Lynch said on Monday.
Tata Motors will see “strong operational recovery of its domestic business, which we believe should be the prime driver of stock valuations,” Merrill Lynch said in a research report, adding that “Jaguar Land Rover is likely to recover next year.”
Tata Motors is scheduled to disclose its financials next week and is currently negotiating with the British government to arrange long-term funds for the sustenance of JLR.
Despite the fact that volumes are likely to remain muted in developed markets such as the US and Europe, Merrill Lynch said that Tata Motors’ consolidated business (standalone and domestic subsidiaries as well as JLR) is likely to register growth in net sales and earnings before interest, taxation, depreciation and amortisation.
Tata Motors’ growth would be mainly driven by higher commercial vehicle sales, mainly trucks and buses, and lower commodity prices, because of which the company can achieve lower costs and can get higher realisation, the report said.
[Source: The Hindu]
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