Tata Motors revvs up on buzz of finalisation of UK acquisition

Tata Motors revvs up on buzz of finalisation of UK acquisition

Tata Motors moved up 0.52% to Rs 709 at 10:59 IST on BSE on reports the company may announce purchase of luxury British brands Jaguar and Land Rover from US automaker Ford Motor Company on 5th March 2008 or on 6th March 2008.

Meanwhile, the BSE Sensex was up 120.48 points, or 0.73%, to 17779.03, following overnight rally in US stocks. US stocks rose sharply on Monday, 25 February 2008, on signs the two largest bond insurers would stabilize, bringing a wave of relief to a market dogged by concerns of further bank write-downs.

On BSE, 12,307 shares of the scrip were traded. The stock had an average daily volume of 2.06 lakh shares on BSE in past one quarter.

The scrip had touched a high of Rs 714 and a low of Rs 707.50 so far during the day. The stock had hit a 52-week high of Rs 849 on 26 February 2007 and a 52-week low of Rs 535 on 22 January 2008.

The scrip had outperformed the market in the one month to 25 February 2008, falling 0.98% as against the Sensex's 3.87% decline. It had also outperformed the market in the past three months, falling 1.56% against the Sensex's 7.72% slide.

India's top commercial vehicles maker by sales has an equity capital of Rs 385.55 crore. Face value per share is Rs 10.

At the current price of Rs 709, the scrip trades at a PE multiple of 13.69, based on Q3 December 2007 annualised EPS of Rs 51.78.

According to reports, officials from Tata Motors and Ford met with British union leaders last week to resolve final details before drawing up a memorandum of understanding for the sale.

Tata has agreed to meet the guarantees sought by union leaders, the reports said. A key issue was whether Tata would continue to source engines and other systems from Ford's British plants, the reports added.

The reports suggested that the announcement was being delayed in order not to overshadow the introduction of an updated Ford Fiesta at the Geneva auto show next week.

On Monday, 25 February 2008 some reports had indicated that Tata Motors has started the process of raising nearly $2.5 billion, mainly from overseas markets, by giving the mandate to a group of banks.

A large chunk of this fund is expected to be utilized to purchase luxury British brands Jaguar and Land Rover from the US carmaker Ford, the reports had added.

The net profit of Tata Motors declined 2.8% to Rs 499.05 crore on 5.2% growth in net sales to Rs 7251.83 crore on Q3 December 2007 Q3 December 2006.

Tata Motors is engaged in manufacturing and marketing heavy, medium and light commercial vehicles, utility vehicles and passenger cars.