Tata Motors Ltd shares gained nearly 3% in early trade on Friday despite the automobile giant posting a loss of Rs 3,698 crore in the first quarter ended June (Q1), as the stock had already corrected by over 5% in the previous trading session in anticipation of poor results.
At 10:37 am, Tata Motors shares were trading at Rs 147.90, up 2.5%, on BSE after hitting an intra-day high of Rs 148.35. The stock has corrected over 41% in the last one year.
Tata Motors earnings were mainly hit by the continuing poor performance of Jaguar Land Rover (JLR). The JLR business reported a pre-tax loss of 395 million pound in the June quarter compared with 264 million pound loss in the same period a year ago, on quarterly revenue of 5.1 billion pound, down 2.8%.
Tata Motors’ consolidated revenue during the June quarter declined 7.8% to Rs 61,467 crore compared with a year ago.
Tata Motors said financial performance at group level reflects the historical seasonality and continued challenging market conditions globally, but company retained its guidance saying that project charge is on track to achieve 2.5 billion pound of profit and cash improvements by the end of the year.
With China stabilising and an exciting product line-up, JLR expects to return to growth soon and its financial results to improve over the balance of the year, the company added.
Meanwhile, Tata Motors’ standalone business (domestic) recorded a loss of Rs 97.10 crore for quarter ended June against profit of Rs 1,187.65 crore in the year-ago period due to negative operating leverage and lower other income. Standalone revenue from operations fell sharply by 20% year-on-year to Rs 13,352 crore in the June quarter.
After the earnings, CLSA said it has a ‘sell’ call on the Tata Motors stock with the stock target price cut to Rs 120 per share from Rs 140 earlier. The company reported the worst pre-exceptional loss before tax in a decade and the margin pressure has been more intense than expected, the brokerage house said.
Morgan Stanley maintained its ‘equal-weight’ call on the stock with a target of Rs 192 per share. It noted that Q1 results missed estimates ad JLR margins dipped, while negative cash flow drove net debt higher.
Jefferies, meanwhile, gave a ‘buy’ call on the stock with a target of Rs 200 per share. Standalone losses are lower than expected helped by sharp expansion in gross margin, Jefferies said, adding that commentary on China has improved with the management expecting growth ahead.
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