Indian market wary of Tata bid

Jan 5 2008 by Alistair Houghton, Liverpool Daily Post

SHARES in Tata Motors fell slightly yesterday as Indian analysts remained wary of its bid to buy Jaguar and Land Rover.

Tata Motors was named this week by Ford as the front runner to buy the two brands, including the company’s Halewood plant that employs more than 2,000 people.

Early in yesterday’s trading on Mumbai’s stock exchange Tata Motors’ shares rose more than 2%, but the stock closed down 1.25% at 784.3 rupees (£10.12). Analysts’ views were mixed.

Ramnath S, an analyst at SSKI Securities, said: “There is a little less uncertainty, perhaps, but it is still too premature to say if it will be positive or negative for Tata.”

Ratings agency Moody’s Investors Service said it was considering downgrading Tata Motors’ rating from stable.

Senior analyst Elizabeth Allen said: “Should it proceed with the transaction and acquire these two businesses, it will face considerable execution and integration challenges.”

But Ashutosh Goel at Edelweiss Securities, which has a “buy” rating on Tata Motors’ stock, said: “This is not money down the drain as some investors are viewing it.”