1. Tata Motors Q1 Results
Trending & Trading
July Auto
SalesJLR downfall
Negative
Outlook
Brokerages
Expectations
EBITDA Down
79%
Revenue
Down 48%
2.
3. Analysis
• Revenue fell 48% year-on-year to Rs 31,983 crore—higher than the Rs 28,247 crore
estimate.
• Operating profit fell 79% to Rs 653.3 crore.
• Margin narrowed to 2% compared with 4.87% earlier.
• Finance costs rise due to high gross borrowing JLR revenue down 44% to 2,859 million
pounds
• Outlook remains uncertain for the year as infections continuing to rise
• Expect gradual recovery of demand and supply in the coming months. JLR will continue
to manage costs and investment spending rigorously Volumes may not pick-up
sufficiently to generate a profit in Q2FY21.
4. CEO Statement
• Still, the company hopes for a revival. “We have witnessed some
green shoots emerging in passenger vehicles owing to some pent up
demand pre Covid, and are hopeful for a full recovery of the
commercial vehicle industry by end of the fiscal year, with a gradual
pickup of demand, aligned to the economic recovery,” Buetschek said.
• Tata Motors has tried to combat the lockdown-related slump by
cutting jobs and investments. Last month, it slashed over a thousand
more jobs at JLR and said it will reduce its capital expenditure by 65%.
The company also deferred or cancelled lower margin and non-critical
investment.
6. Scheme of Arrangement approved
• In India, Tata Motors is looking to hive off its passenger vehicle and electric
vehicle businesses into a subsidiary. It is engaged in talks in several original
equipment manufacturers, it had said in June.
• The company said it will commit to “significantly” deleveraging the
business and aim to generate positive cash flows for the rest of the year.
10. Brokerages on Tata Motors
• Kotak Securities On Tata Motors -Sell rating -Price target of Rs 90
• Substantial pick-up in volumes is essential for return to profitability See
limited visibility of the company returning to profitability anytime soon
Have a weak outlook on volumes Standalone entity continues to remain
under pressure Passenger Vehicle business likely to burn cash
• Edelweiss On Tata Motors - Buy rating -Price target raised to Rs 141 from
Rs 127
• Robust performance by JLR during the quarter Continues to outperform on
balance sheet as well as cost control initiatives
• Wholesales will lag retail sales for JLR in the near-term as it aims to
normalise dealer inventory Q2FY21 may see a double-digit decline in
volumes Remain positive on JLR's upcoming product pipeline Believe that
the capex cycle for JLR has peaked
11. Beat The Street Outlook
• DownGraded by Credit Rating Agencies
• Decline in Quarterly Net Profit with falling Profit Margin (YoY)
• Degrowth in Quarterly Revenue and Profit in Recent Results
• Recent Broker Downgrades in Reco or Target Price
• Overall performance of company is below expectations
• Also company is not coming up with electrical vehicle, as world is
moving towards the Electrical Vehicles
• Reduction and separation of Subsidiary may looking positive
• Still For short Term : No Buy, if already bought – Then Hold
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