Tata Motors Q2 preview: Co to bleed money dragged by JLR volume loss

NEW DELHI: Tata Motors is likely to bleed money for another quarter as sales have not recovered to the pre-Covid levels largely due to slump in demand of medium and heavy commercial vehicles and Jaguar Land Rover (JLR).

Brokerages believe Tata Motors may print a loss of anywhere between Rs 900 crore to Rs 2,100 crore, when the company announced earnings numbers for September quarter on Tuesday.

“JLR wholesale volumes declined 40 per cent YoY. Topline is expected to decline 14 per cent with EBITDA margin down 271bps to 8.1 per cent. We expect JLR to post revenues of GBP 4.3 billion (down ~29 per cent YoY) with adjusted Ebitda margin of 9 per cent (down 475bps YoY). On an operational basis, we expect JLR to report a loss of GBP 130 million,” said ICICI Securities.

On a standalone basis, the broker said topline may decline 4.4 per cent YoY as the passenger vehicle business is witnessing strong growth and is likely to post Ebitda margin improvement of 197bps YoY to -0.4 per cent.

The broker outlines total operating income of Rs 56,141 crore, down 14.2 per cent YoY and net loss of Rs 2,137.6 crore for Tata motors on a consolidated basis.

The company in the previous quarter had posted a consolidated net loss of Rs 8,437.99 crore with revenue at Rs 31,983.06 crore. For the September quarter of last year, the net loss stood at Rs 216.50 crore on a revenue of Rs 65,432 crore.

Prabhudas Lilladher outlines volume gain of 5 per cent YoY and 3.41 per cent QoQ. Further, on account of increase in gross margin and lower other expenses it expects standalone margins to turn positive at 6.1 per cent.

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Despite a late rally in auto stocks, shares of Tata Motors have delivered negative returns in 2020. Year to date, the stock is down 28 per cent but in the last one year, it is up over 5 per cent.

Phillip Capital is a little more optimistic than others and sees revenue to decline by 6 per cent YoY on weak economic activity due to Covid-19 lockdown and Ebitda margin to grow 390 bps YoY, on lower volumes and operating deleverage.

It projects revenue at Rs 10,552.6 crore, up 5.5 per cent YoY and loss at Rs 939.9 crore.

According to ICICI Securities, key monitorables are:

  • Demand and inventory situation globally
  • Discounting trends across JLR’s key markets
  • Outlook on capital expenditure and R&D
  • Domestic business turnaround strategy



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