TATA MOTORS: Q4 Result Below Expectations--Near Term Range:467-575 ?

Technically, TM (CMP:498) has immediate positional support of around 482 & sustain below that it may fall to 472-467 zone. Consecutive closing below 467, it may crash to 454-442-421-407 zone in the near term under bear market situation.

On the upside, TM has to sustain above 505 for an immediate to short term target of 515-525-532. Consecutive closing above 532, it may target 548-565-575-585 zone in the medium term. In the long term, only sustain above 585, TM could scale 601-630 & 700 zone (FY:17-18) under very bullish market scenerio.

Bottom Line: Technical Trading Levels

	SL</>2	FROM SLR
		TATA STEEL	CMP	498
			T1	T2	T3	T4	T5	T6	T7	SLR
Strong >	505		515	525	532*	548	565	575-585	601-612	<500
Weak <	500		493-482	472	467*	454	442	421	407-400	>505

Q4 result of TM published yesterday after market hours is much below market expectations amid higher depreciation, MTM unrealized losses on FX loan hedges (JLR), some other higher other expenses, weak sales of JLR in China & wider net loss in its India operations.

Looking ahead, the management is cautiously optimistic in slow down hit China, which accounted nearly 25% of its global sales. In India, TM is very hopeful as it sees demand  for MCV & HCV are rising and sales of domestic PV rose 19%, while LCV sales remain under pressure.

In the recent months, TM's growing sales of PV is being supported by introduction of some new models like Zest compact sedan & Bolt hatchback. The company is actively trying to build its image from a HCV company to a PV & CV  segment. Its recently launched an upgraded version of Nano (Automatic & Manual) , which may evoke good response in the coming days.Its also in the process to introduce new brands in PV & SUV segment to attract younger generations to TATA brand.

Apart from the PV segment, TM's sales of bigger trucks & buses are also recovering in line with economic expansion in our country sustained by growing demand from fleet operators, thanks to "Modinomics". Also in reality, China may not "slow down" too much as being feared, JLR sales may bounce back there also.

As par quick BG metrics of  TF model, current median valuation of TATA MOTORS is around 510 & projected valuation may be 560-620 (FY:16-17), under the current market conditions.

SCRIP	EPS(TTM)	BV(Act)	P/E(AVG)	LONG TERM	SHORT TERM	MEDIAN VALUE	200-DEMA	10-DEMA
TATAMOTORS	47.67	203.82	10.5	507.61	505.48	506.55	514.78	510.48

 

TATAMOTORS

57.5

295.5

10.5

557.49

555.16

556.33

514.78

510.48

 

TATAMOTORS

71.5

724

10.5

621.67

619.07

620.37

514.78

510.48