BackTata Motors shares fall 6% after poor JLR sales impact its Q1 results
Tata Motors posted a consolidated loss of ₹1,862.57 crore, its worst since ₹2,599 crore loss in December 2009 quarter
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Shares of Tata Motors Ltd on Wednesday fell as much as 6% as many brokerage cut their target price after the company posted its worst loss in nine years due to subdued performance at Jaguar Land Rover (JLR) unit even as standalone performance continued to improve. The stock touched a low of ₹ 248 a share and fell as much as 6.11% in intraday. At 10 am, Tata Motors was trading at ₹ 256.20 on BSE, down 3% from previous close. So far this year, Tata Motors shares have fallen 41%. Tata Motors DVR shares fell 3% to ₹ 139.90 a share.
Tata Motors posted a consolidated loss of ₹ 1,862.57 crore, its worst since ₹ 2,599 crore loss in December 2009 quarter. Analysts expected the company to post consolidated profit of ₹ 920 crore. Consolidated revenue rose 14.7% to ₹ 67,081.30 crore.
JLR performance was impacted by headwinds such as a decline in wholesales, led by planned de-stocking and sales deferral in China post import duty cuts. In addition, impact of Brexit and diesel uncertainly continued to dampen the performance.
“JLR earnings were sharply below estimate due to channel de-stocking, higher incentives in China ahead of tariff cuts and number of other factors. While many seem one-offs, such disappointments have been a recurring issue for JLR in a weak environment. India business delivered a large beat helped by sharp improvement in passenger vehicles. We cut our price target to factor in weaker prospects for JLR but undemanding valuation post steep correction makes risk-reward favorable," said Jefferies India in a note to its investors.
The brokerage firm has maintained its “buy" rating but cut its target price to ₹ 355 a share from ₹ 440 a share.
On standalone basis, the company posted a profit of ₹ 1,188 crore, compared to a loss of ₹ 500 crore. Revenue rose 83% to ₹ 16,803 crore.
Management has maintained its EBIT margin guidance for both JLR and standalone business at 4-7% and 3-5% respectively over FY19-21 estimates.
“Basis the current headwinds in major market like UK, Europe and to some extent US, we estimate 5% CAGR in JLR volumes (wholesale excl. China) over FY18-20E. During the same period, domestic CVs and PVs are likely to record 15%/12% CAGR, driven by new models launches and network expansion. Higher-than-estimated stress in JLR volume / margin and adverse currency movements are key risks to our view," said JM Financial in a note to its investors. JM Financial has maintained its buy rating on the stock and cut ints target price to ₹ 400 from ₹ 490 a share
Brokerage firm Emkay Global has maintained its buy rating and cut its target price to ₹ 420 a share from ₹ 450 a share. BoBCaps has cut its target price to ₹ 410 from ₹ 450 and maintained buy rating.
Kotak Institutional Equities has maintained buy rating but reduced its target price to ₹ 420 a share from ₹ 445 earlier. “The cut in target price is driven by 2-6% cut in our earnings estimates largely due to significant reduction in JLR China JV estimates," Kotak said in a report.
Of the analysts covering the stock, 29 have a “buy" rating, nine have a “hold" rating, while two have a “sell" rating, according to Bloomberg data.
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