Tata Group Stocks: Are Tata Group shares losing their shine? This question is arising because out of the 10 companies whose ratings have been reduced the most by brokerage firms in the last one year, 3 are Tata Group companies. Moneycontrol has done a detailed analysis of these three companies – Tata Steel, Titan and Tata Motors. Let us know why brokerage firms are afraid of incurring losses in these 3 Tata shares.
First of all, let’s talk about Tata Steel. Tata Steel is the number one stock of Tata Group whose rating has decreased the most. Till a year ago, 25 brokerage firms were advising to buy this stock, the number of which has now come down to 14. The biggest challenge in front of Tata Steel is the import of steel from China at a low price. Due to this, the prices of steel have come down at the global level, due to which the margin of Tata Steel is falling.
In addition, Tata Steel may face a tax liability of Rs 17,347 crore in Odisha, as the Supreme Court has now given states the right to levy taxes on mineral rights. Apart from this, the company’s debt has also increased from Rs 4,600 crore to Rs 82,160 crore, which further adds to its existing challenges.
Tata Steel’s stock has climbed nearly 32 percent since November. The company’s profit from its Indian business may increase, but the performance of Tata Steel UK and Tata Steel Netherlands remains weak. In such a situation, analysts say that this stock does not look attractive in terms of risk-reward.
Now let’s talk about Titan, which is another major company of Tata Group. The number of brokerage firms giving Buy rating to this stock has come down from 23 to 16 in the last one year. Recently, JP Morgan reduced Titan’s rating from ‘Overweight’ to ‘Neutral’. Along with this, its target price was also reduced from Rs 3,850 to Rs 3,450. JP Morgan has said that Titan may face weak demand in the short term.
Gold prices are at a high level, which has reduced the customer demand for jewellery. Apart from this, due to increasing competition and promotional activities, the company’s margins are also under pressure. Brokerage houses Morgan Stanley and Goldman Sachs have also expressed concern about this. They said that Titan’s jewellery segment is facing special pressure, and this can be a big challenge for the company.
Now let’s come to the last stock in this list, Tata Motors. In the last one year, the number of brokerage firms giving Buy rating to this stock has come down from 27 to 22 in the last one year. UBS predicted a 20% decline in its stock a day ago and gave it a target of Rs 825 with a ‘Sell’ rating. Tata Motors’ stock has risen 62% in the last one year. That is why analysts see limited possibilities of further rise in this stock.
Tata Motors is facing production problems at its Jaguar Land Rover (JLR) division. Global demand for JLR is also sluggish. Supply disruptions from major aluminium suppliers have been caused by plant shutdowns and flood-related issues during the summer. ICICI Securities has said that higher than expected volume growth at JLR, the pace of debt reduction and the possibility of a cash flow shortfall could also impact Tata Motors’ financial position.
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