NEW DELHI: Shares of Tata Motors fell 2 per cent in Friday’s trade after automaker's losses more than doubled in the June quarter.
The Tata group firm reported Rs 3,679.66 crore loss for the quarter against a loss of Rs 1,862.57 crore last year.
Analysts in an ETNOW poll had projected a hit of Rs 1,890 crore. The stock fell 4.29 per cent to Rs 138.15 on BSE. "Demand outlook remains challenging, and we expect FCF to remain negative for JLR through FY21; which would cap valuation,” said Edelweiss Securities.
The brokerage has a target of Rs 156 on the stock, valuing the India business at 7 times December 2020E Ebitda and JLR at 5.5 times EBIT. JLR management has reiterated the 3–4 per cent EBIT margin guidance for FY20, despite a weak June quarter result hoping that the worst is behind in China and marketing and warranty cost would reduce going ahead. “The India business suffered from a sharper-than-expected downshift in demand, which management expects to improve ahead.
However, demand outlook remains subdued across businesses, which echoes our view this time it’s different,” Edelweiss said. Brokerage Motilal Oswal Securities has cut its FY20 consolidated EPS estimate by 24 per cent.
While volumes for JLR appear to have bottomed out, a profitable recovery with cash generation would be very gradual and challenging in a disruptive environment for the global automotive industry, the brokerage said. “FY21 could be a challenging year for India as well as JLR (run-out of most profitable RR/RR Sport).
Further, the noise around EVs, Brexit and trade war adds to the uncertainty,” the brokerage said.