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Photo: Bloomberg
Photo: Bloomberg

Tata Motors surges 20% on hopes of demand recovery in China

  • Chery Jaguar Land Rover Automotive has restored three-fourth of its budgeted production in China, for April
  • Motherson Sumi Systems increased 7.55% and Maruti Suzuki added 5.30% today

MUMBAI: Shares of Tata Motors Ltd on Thursday gained 20% to close at 93.75 on reports suggesting demand recovery in China.

Mint on April 29 had reported that Chery Jaguar Land Rover Automotive Co Ltd (CJLR) has restored three-fourth of its budgeted production in China, for April. The report also hinted that CJLR plans to further ramp up production for May and June. CJLR is a 50:50 joint venture between China’s Chery Automobile Company Ltd and Tata Motors-owned Jaguar Land Rover (JLR).

The increase in China production brings relief for Tata Motors' luxury car unit, which had reported a sharp year-on-year (YoY) drop of 85% in February sales.

The S&P BSE Auto rose 5.96% to close at 13349.86 points today. Tata Motors has added 31.03% in last one month, compared to the 24.23% gains in S&P BSE Auto and 14.42% increase in the Sensex.

According to Bloomberg, 2.83 million, or 0.09%, shares of Tata Motors' changed hands in two bunch trades earlier today. The buyers of the deal, however, were not immediately known.

Among other auto stocks, Motherson Sumi Systems Ltd (MSSL) increased 7.55% and Maruti Suzuki India Ltd (MSIL) added 5.30% today.

“Overall market moved up on assumptions around advancements in medical science research on covid-19 vaccine. Moreover, auto sector and Tata Motors outperformed strongly on the reports indicating auto demand recovery in China close to pre-covid levels," said Mitul Shah, vice president (research) at Reliance Securities Ltd.

Abhishek Jain, auto analyst at Dolat Capital suggested that easing of lockdown restrictions in Europe and the US and gradual re-opening of plants is a big positive for JLR.

The British luxury carmaker had recently announced that it would resume production from 18 May, starting from Solihull (UK) plant and other facilities in Slovakia and Austria.

“However, we expect that Indian automobile industry would take at least 2 quarters to reach pre-covid levels of demand," Shah added.

The BSE Auto index has lost 29.14% in last one year, compared to the 13.61% fall in the benchmark Sensex.

Tata Motors' stock hit a record high of 222.1 on 26 April, 2019. The stock touched a 52-week low of 63.6 on 24 March.

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