BackTata Motors shares surge on better-than-expected Q2, positive outlook
The automaker said it expects gradual recovery of demand and supply in the coming months.
PremiumShares of Tata Motors jumped nearly 6% in early trade today after the company said it expects gradual recovery of demand and supply in the coming months. The stock rose as much as 5.5% to ₹143.15 on the BSE after favourable management commentary.
Tata Motors' consolidated net loss widened to ₹307 crore in the September quarter due to the pandemic, but it expects gradual recovery of demand and supply in the coming months.
The auto major had reported a net loss of ₹187.7 crore during the July-September period of the previous fiscal.
Total revenue from operations fell 18% to ₹53,530 crore, the carmaker said in a filing with the exchange. The company said it had saved 600 million pounds ($782 million) during the quarter at JLR under Project Charge and was on track to achieve the full-year target of 2.5 billion pounds.
Tata Motors also expects most of the issues concerning the commercial vehicle segment to be resolved in the next three months if the present trend of improvement in demand continues, P B Balaji, Group Chief Financial Officer, Tata Motors, said in the post-earnings conference call.
"As we look ahead, we see demand gradually improving. In the case of JLR, we see demand picking up in all the geography we operate under and we expect continued performance improvement in JLR as the quarter and year progress.
"At Tata Motors, we see passenger vehicles gradually returning back to growth, and we are also seeing an increase in market share as the supply chain issues start sorting out. Overall, we expect the second half of the year to be even stronger compared to the first half of the year," Balaji said.
On a standalone basis, the company posted a net loss of ₹1,212.45 crore for the September quarter. It had registered a net loss of ₹1,281.97 crore in the same period last fiscal.
The total revenue from operations stood at ₹9,668.10 crore, as compared to ₹10,000.48 crore in the September quarter of 2019-20.
"In Q2FY21, Tata Motors (TML) delivered on key free cash flow promises despite sharp volume dip (JLR/domestic MHCV). JLR built on its Q1FY21 turnaround and India PV business achieved EBITDA breakeven (on cash breakeven track)," domestic brokerage Edelweiss, which has a buy rating on the stock, said in a note.
"For the CV business, management indicated lead indicators like economic activity, availability of finance, lower NPA risks and resale value of trucks are better-than-expected. In the India PV business, TML continues to gain market share driven by its refreshed product portfolio, realignment of dealer incentive structure as well as focused marketing," the brokerage added. (With Agency Inputs)
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