Despite Nano, Tata Motors scrip falls from day’s high
Mar 23rd, 2009 |
Mumbai, March 23 (IANS) The Tata Motors scrip slipped from the day’s high as investor
interest waned over the much talked about Nano launch and analysts claimed that the car would
not bring about a turnaround for the $62.5-billion Tata group.
The Tata Motors scrip, which shot up over 8 percent in Monday morning trade, fell from its
day’s high to end 3.2 percent above its previous close at Rs.166.05. The stock had opened at
Rs.168.75.
The commercial rollout of the small car took place around 4.30 p.m. in Mumbai - after the
closing bell - at a ceremony at the Taj Mahal Palace and Tower, a hotel partially destroyed by
terrorist attacks last November.
Analysts were, however, sceptical about Nano providing the much-needed succour to a debt-
ridden Tata group as the company would have to sell about two-three million cars just to break
even.
“While Nano’s launch will be seen in positive light by Tata Motors lenders, it won’t have a
significant impact on the group’s fortunes as there is not enough capacity to roll out a huge
number of cars,” said Jagannadham Thunuguntla, equity head with SMC Capital.
“One also needs to verify how much of a margin the company will make on each car. Till some
more clarity comes through, markets will remain sceptical,” Thunuguntla added.
Showcasing the Nano prototype last year, Tata Motors had announced it would cost Rs.100,000
($2,000) at the factory gate - cheaper than any other car on the road now.
The four-door car has a 33-bhp engine at the rear and is targeted at the Indian middle class
population that aspires to trade its two-wheelers for the Nano. Tata Sons, the holding company of
Tata Motors, is reeling under heavy debt after buying firms like Tetley Tea, Daewoo
Commercial Vehicle, Corus Steel and Jaguar-Land Rover.
Analysts said about $2 billion of Tata’s debt is due in June, and the company will have to come
up with a plan fast to stem losses.
“Tata’s big ticket acquisitions were a mistake. It seems they got carried away by the bull run,”
said Thunuguntla.