Tata Motors shares rose nearly 3 percent on May 8 after strong global cues supported by trade developments involving the UK. According to reports, US President Donald Trump is likely to announce a trade deal with Britain, which could benefit Jaguar Land Rover (JLR), the luxury car brand owned by Tata Motors.
The New York Times reported that the announcement could be made in a press conference at the White House. Though Trump did not name the country directly, he said it would be a “major trade deal” and hinted it is the first of many such deals. A UK official also mentioned progress on a deal that might reduce tariffs on steel and auto products.
At 9:37 am, Tata Motors shares were trading 2.4 percent higher at ₹697 before touching an intraday high of ₹704.5. The stock had also gained on May 7 after the India-UK Free Trade Agreement (FTA) was officially signed. This agreement is expected to lower import duties on luxury vehicles, with tariffs being reduced from over 100 percent to just 10 percent under a quota system.
This is crucial for JLR, which derives some 20 percent of its sales from the US. The firm had suspended shipments to the US last April after the imposition of a 25 percent auto import tariff was announced. Reports now indicate that shipments might be back on track, although no official confirmation has come so far.
In parallel, shareholders of Tata Motors also approved the company’s proposal for demerging its passenger vehicles and commercial vehicles businesses into two listed companies separately. The action, which carried with it a vote of over 99.99 percent, is designed to unlock additional value and enable focused growth for each business division.
With trade agreements, cutting tariffs, and business structural reforms, Tata Motors is now attracting investor attention on expectations of improved earnings and growth prospects.
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Source: Moneycontrol.
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