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News: Tata Motors has reduced prices of its flagship Electric SUV i.e. Nexon by ~Rs 50,000/unit for the prime variant and ~Rs 85,000 for the Max variant. It has also introduced a new XM variant in the Max range at a starting price of Rs 16.5 lakh/unit vs. starting price of Rs 18.34 for Max variants earlier. Also, as per media sources, Tata Motors is likely to raise Rs 3,500-4,000 crore from partial stake sale in its subsidiary Tata Technologies thereby valuing the entity at ~Rs 20,000 crore
Views: The price cut of Electric Nexon is in response to a new offering in the electric SUV space by competition (domestic OEM). This will help protect the volumes at the company, but given the mid-single digit margins clocked by the company in PV domain and increase in battery prices in the recent past, this could put pressure on margins in this domain. On the Tata Technologies IPO front, the valuation as per media articles is on the lower side of our valuation band with potential target price increase for us now pegged at Rs 40/share vs. Rs 50/share earlier. Also, the amount raised is on the lower side of expectation and hence lower b/s deleveraging for Tata Motors
Impact: Negative