Tata Motors is riding on premium demand but for how long?

Here’s a list of stock recommendations by various analysts/ brokerage houses:

•Jeffries has downgraded Tata Motors to hold from its previous buy with a price target of Rs 241 against its current price of Rs 239.70, reflecting a negligible growth rate of 0.54%. While its subsidiary, JLR benefited from a combination of strong demand, strong pricing and superior mix, Jefferies believes that these advantages are set off by adverse risk especially to demand strength and extraordinary pricing power in China. The premium that China pays, especially for imported cars, have now started coming off.

The slow down in the domestic CV market could put further pressure on cash flows as it is showing incipient signs of a slowdown.

JLR is still benefiting from the secular increase in proportion of SUVs within the premium segment but great momentum seen on account of the launch of Evoque has run its course. The next significant new product is the new Range Rover due in December quarter but that is a replacement for an existing product, said the report.

Tata Motors is India’s largest automobile company and is the market leader in commercial vehicles. The company is the world’s fourth largest truck manufacturer, and the world’s third largest bus manufacturer. Tata Motors is also the third-largest player in the Indian passenger vehicle industry. Post the acquisition of Jaguar Land Rover from Ford in 2008, the company now has presence in the global luxury market.

•Nomura Equity Research is bullish on Dr Reddy’s Laboratories with a target price of Rs 1,918 againsr its current price of Rs 1,642 per share, reflecting a growth of 17 percent. Nomura recently met up with the company management and expects the company to clock at least $2.5 billion in revenues for the year ended March 2013 with a possibility of reaching $2.7 billion on the back of product approvals and increase in market share. The US remains the most important growth driver for the company and it expects to launch 15-20 products in the country every year until 2017. Also, the revival in the Indian growth market is expected to augur well for the company.

•MF Global has downgraded Hindustan Unilever to neutral while maintaining its target price at Rs 460 per share. It is currently trading at Rs 451 per share. According to MF Global, while the company’s operating performance continues to be robust, the recent rally in the stock market fully captures the near-term and long term positives for the company. It expects the company to clock a 18.6 percent growth in net profit on sales growth of 15 percent for the year ended March 2013.

•IIFL reports a robust outlook for Torrent pharma and reiterates its buy call on the company with a price target of Rs. 781 against its current price of Rs. 605, reflecting a growth of 30 percent. IIFL expects strong growth ahead with contributions coming in from all the great economies like Brazil, US and the domestic business. Majority of the business being branded ensures long term sustainable growth. Torrent also has one of the best free cash flows amongst pharma companies. The recent correction of 14 percent from its peak also makes the stock attractive and a good opportunity to buy. In the last one year, the stock has fallen by 3.65 percent, lower than the Sensex fall of 6.8 percent.