Tata Motors stock hits 15-month low on weak results

The stock of Tata Motors on Thursday fell to hit a 15-month low of Rs 380.90 after the automaker reported weaker-than-expected earnings in the April-June quarter. Though Tata Motors posted a net profit of Rs 3,200 crore, it was on the back of a one-time gain relating to recent changes made to JLR pension plan, without the one-time gain the company would have posted a net loss due to a forex loss of Rs 631 crore. So far this year, the stock fell by 19.19%. The stock settled at Rs 380.90 on the BSE. During the day, it ran down 9.77% to Rs 376 — its 52-week low. On the NSE, it slipped 8.61% to end at Rs 380.20.

The company’s market valuation declined by Rs 10,350.9 crore to Rs 1,09,979.10 crore. The adverse environment in domestic and international markets along with forex loss led to poor results. Lower wholesale volumes, along with the continuation of higher competitive incentive levels and launch and growth costs impacted the company’s overseas performance.

The wholesale volumes of Jaguar Land Rover, barring Cherry JV, declined by 2% year-on-year to 1,17,916 units. The seasonality along with higher tax in the UK from April this year impacted volume growth. The company’s domestic business was affected due to a ban on Bharat Stage 3 9 (BS III) vehicles from April this year and the transition to the goods and services tax.

The medium and heavy commercial vehicles (M&HCV) segment, witnessed a sharp fall of 34.8% in sales due to pre-buying in March triggered by change in emission norms. On a standalone level, the company reported a net loss of Rs 467 crore against a net profit of Rs 26 crore in the corresponding period last year. Standalone net sales stood at Rs 9,094 crore, which was a decline of 11.6% on a y-o-y basis.

In a note to investors, Motilal Oswal said they have downgraded Tata Motors’s consolidated earnings per share (EPS) by 27% for FY18, factoring in for cost pressures in JLR and a stronger rupee. Of the 46 brokerages who track the stock, 34 have given it a ‘buy’ rating, eight gave a ‘hold’ and four a ‘sell’ rating. A total of 3.05 crore shares were on BSE and NSE, 4.02 times more than its six-month daily average volume of 75.84 lakh shares.

Tata Motors