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Tata Motors stock falls 5.94%, top loser on Sensex after Donald Trump warns of 20% import tariff on EU-assembled cars

The stock closed 5.94% or 18 points lower at 289.95 level on BSE. Analysts say they expect Jaguar Land Rover (JLR) vehicles exported to the United States to take a big hit if Trump imposes auto tariffs.

twitter-logo BusinessToday.In        Last Updated: June 26, 2018  | 09:41 IST
Tata Motors stock falls 5.94%, top loser on Sensex after Donald Trump warns of 20% tariff import of EU-assembled cars

The Tata Motors stock was the top Sensex loser in trade today after US President Donald Trump on Friday threatened to escalate a trade war with Europe by imposing a 20 percent tariff on all US imports of European Union-assembled cars.

The stock closed 5.94% or 18 points lower at 289.95 level on BSE. Analysts say they expect Jaguar Land Rover (JLR) vehicles exported to the United States to take a big hit if Trump imposes auto tariffs. Trump tweeted the same after European Union reprisals took effect against US tariffs on European steel and aluminum, targeting $3.2 billion in American goods exported to the 28-member bloc.  

"If these tariffs and barriers are not soon broken down and removed, we will be placing a 20% tariff on all of their cars coming into the US Build them here!" Trump wrote.

JLR, Britain's biggest automaker, is the company's largest business which contributed nearly 77 percent to Tata Motors' total revenue in the year ended March 31, 2018.

The stock which opened at Rs 308.15 level fell to an intra day low of 288 level and hit a high of 308 level on BSE.

The stock is just 2.71% away from its 52-week low of 282 level which it hit on May 31, 2018.

It has fallen after three days of consecutive gains.

The stock is down 34.59% during the last one year. It has fallen 32.78% since the beginning of this year.

On June 25, Motilal Oswal gave a buy price target of Rs 431 for the next one year. The recommendation said stock should be bought at 308 level.

"We appreciate JLR's efforts and capabilities on various technological aspects, enabling it to now be at the forefront of disruption in the global automobile industry. While FCF is   likely   to   remain   negative,   we   expect   sharp   dip   from   1.2 bn   pound sterling in   FY18   to 100 mn pound sterling in FY20. We maintain 'HOLD/SP' on Tata Motors (valuing India at 8 times FY20E EBIDTA and JLR at 5.5 times EBIT)," Edelweiss Broking said in a note.

Meanwhile, CLSA has retained sell rating on Tata Motors with a target price of Rs 295.

"Narrowing hedging losses should boost its earnings growth in FY19 but we continue to see operational headwinds for its margin," said CLSA.

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