Mumbai: Tata Motors shares on Tuesday slumped over 14% to hit a near seven-year low after Jaguar Land Rover reported a 12.3% decline in global sales, and announced shutdown of its West Midland plant for two weeks due weak global demand. The Tata Motors stock fell as much as 14% in intraday trade to Rs 183—a level last seen on 2 January 2012. At 11.18am, the scrip was trading at Rs 185 on BSE, down 13% from previous close. So far this year, the stock has dropped over 57%.
JLR reported retail sales at 57,114 units in September, down 12.3% from a year ago. Its sales were down a modest 0.8% in the UK and 4.7% in Europe. In North America, sales were 6.9% lower.
“As a business we are continuing to experience challenging conditions in some of our key markets. Customer demand in China in particular has struggled to recover following changes in import tariffs in July and intensifying competition on price, while ongoing global negotiations on potential trade agreements have dampened purchase considerations. Despite this, we expect lower tariffs on UK imports to be beneficial over the full year”, said Felix Brautigam, Jaguar Land Rover Chief Commercial Officer in a notice to BSE.
Recently, CRISIL and Fitch Ratings have revised their rating outlook on the company due to weaker outlook on the operating performance of JLR in terms of sales volumes, operating profitability and cash flow generations.
JLR’s free cash flow fell significantly during FY18 to negative £1 billion (about 4.2% of sales), with Fitch expecting this metric to fall further to about -6% by the end of the current fiscal.
The company has not announced yet its earnings release date for the September quarter. According Bloomberg estimates, Tata Motors may report a consolidated loss of Rs 39.10 crore while revenues will be at Rs 69643.70 crore. On standalone basis, it may report a profit of Rs 20.10 crore while sales will be at Rs 30754.10 crore.
“The company is likely to report 445bps YoY margin contraction owing to lower scale in JLR and commodity inflation. JLR’s EBITDA margin would contract 374bp YoY (+184bps QoQ) to 8.2% led by negative operating leverage” said HDFC Securities in a 8 October report.
Of the analysts covering the stock, 29 have a “buy” rating, nine have a “hold” rating, while three have a “sell” rating, showed Bloomberg data.