Tata Motors Q2 losses widened year-on-year during the September quarter as sales continued to remain lower than the previous year, but the company performed better than market’s expectations on the back of cost saving efforts and deferred tax credit.
At 10:46 am, Tata Motors shares were up 2.62 per cent at Rs 139.25, while benchmark Sensex was down 0.71 per cent to 40,235.88 points. Earlier in the day, the scrip had risen as much as 5.49 per cent to Rs 143.15.
The Mumbai-based automaker reported a loss of Rs 307 crore during the second quarter as compared to a loss of Rs 188 crore during the corresponding quarter last year. Revenue declined 18 per cent year-on-year to Rs 53,530 crore. Earnings before interest, tax, depreciation and amortisation (EBITDA) declined by 13 per cent to Rs 6,098 crore.
Jaguar Land Rover, which accounts for about 80 per cent of the company’s revenue, returned to profitability with a pre-tax profit of £65 million. Revenue declined by 29 per cent for the British carmaker to £4,352 million, according to a press note from Tata Motors.
ICICI Securities maintained its ‘buy’ rating on the stock, and raised its target price to Rs 197, from Rs 131 earlier. “The enhanced management focus on FCF generation coupled with improving domestic business positioning in PV (passenger vehicle) business are likely to rebuild investor confidence,” the brokerage said.
“We believe consensus is discounting a relatively low success rate for JLR to remain self-sustaining and achieve meaningful deleveraging.” it added.
Motilal Oswal analysts too retained their ‘buy’ call on the stock, and expect Tata Motors to see the triple benefit of macro recovery, company-specific volume/margin drivers, and sharp improvement in FCF and leverage in both JLR as well as the India business.
“However, near-term risk of volume disruption in the EU and UK cannot be ruled out due to the possibility of a second wave of COVID,” they warned.