Tata Motors: JLR in the driving seat
Shares of Tata Motors rallied early Wednesday trading, despite the passenger car maker widening its fiscal second quarter net loss to Rs 307 crore from Rs 187.7 crore a year ago. The optimism in is driven by the outperformance in the Jaguar Land Rover (JLR) business.
The enhanced management focus on FCF generation coupled with improving domestic business positioning in PV business are likely to rebuild investor confidence.
The Tata Group company has shown improvement in the figures on a quarter-on-quarter basis. Tata Motors revenue in July-September period rose from that in the preceding quarter, while its losses narrowed.
Consolidated statement for the July-September quarter shows that total income of the company improved to Rs 54,163 crore compared to Rs 32,589 crore in the previous quarter. Commercial vehicle sales jumped 12.6 times sequentially. Jaguar Land Rover’s retail sales were at 113,569 units in the quarter, up over 50% from the previous quarter. Jaguar’s EBITDA margin was at 11% which, was a positive surprise.
JLR’s EBITDA was 31% above estimates, which could be attributed to higher net realizations because of a richer geographical mix (higher mix from China) and lower variable marketing expense, along with better-than-expected gross margins, and lower employee costs. It’s retail market share in the global luxury car industry has declined to around 6.5% in the previous year as compared to 8-9% share. In fact, JLR does not have attractive new model launches which can help it regain lost market share over the next 2-3 years.
This document is meant for the recipient only for use as intended and not for circulation. This document should not be reproduced or copied or made available to others. The information contained herein is from the public domain or sources believed to be reliable. While reasonable care has been taken to ensure that information given is at the time believed to be fair and correct and opinions based thereupon are reasonable, due to the very nature of research it cannot be warranted or represented that it is accurate or complete and it should not be relied upon as such. Also above note is not a recommendation to Buy or SELL and is only a view based on facts and figures and we will be in no way responsible for any losses incurred by anyone who uses this information to either trade or invests securities mentioned herein.