The Hindu Business Line : Tata Motors shines on hopes of picking Land Rover car plants

Mumbai, July 19 The Tata Motors’ stock was a star performer at the country’s bourses today in the wake of rumours of its interest in acquiring Jaguar and Land Rover car plants from Ford Motors surfacing on Wednesday.

At the National Stock Exchange, the stock closed nearly 4.5 per cent higher than the previous day at Rs 776.75 beating the rise in most other pivotal stocks, quite comfortably.

Valuation Gap

Commenting on the rise in share prices of Tata Motors, Ms Vaishali Jajoo of Angel Broking said, “I don’t think the price has gone up due to the news reports. The price of all companies in the motor segment in the large-cap stock has gone up today, bridging the valuation gap between them and other large cap stocks.” Until the deal numbers are out, nothing concrete can be said, she added.

According to Mr Umesh Karne, Senior Research Analyst with M K Shares and Stock Brokers, this acquisition, if and when it happens, will be beneficial to the company in the long term.

“Twenty five per cent of Tata Motors’ revenues come from the international market, but they have not been able to make a presence felt in the European market. Once it associates itself with premium category brands like Jaguar and Land Rover, the company will get a direct entry into the European and US markets,” he said.

Premium Brand

While Ms Vaishali feels that Tata Motors may face a dilemma in terms of its brand positioning in view of the fact that it is launching the Rs 1-lakh car, Mr Karne thinks the market size for both segments is equally opportune and the acquisition of a premium brand will strategically be a logical step for Tata Motors.

He also feels that Tatas’ interest may be the first step to the company wanting to launch its own cars in the European market later on.

Ford was reported as saying that they were working with their financial advisors and they also had a meeting with the Government on Wednesday but not expect any big announcements immediately.

They are still investigating their ongoing strategic options and no time scale has been fixed for a decision.

More Stories on : Stocks | Mergers & Acquisitions | Cars | Tata Motors Ltd

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