Tata Motors Climbs 8.5% Despite Reporting Q1 Loss

Shares of Tata Motors rose as much as 8.5 percent to Rs 113.5 apiece on Monday as was also the top-performing stock on the Nifty 50 index in the morning session. On 31 July, the automobile company reported a wider loss of Rs 8,438 crore for the June ended quarter from Rs 3,698 crore a year ago.

Its British luxury unit, Jaguar Land Rover, saw its sales recover during the quarter in China and the US but warned that the demand outlook for its vehicles remains uncertain because of disruptions caused by the coronavirus induced lockdowns.

JLR's China business, Chery Jaguar Land Rover Automotive Co. Ltd (CJLR), an equal joint venture between China's Chery Automobile Co. Ltd and JLR, achieved break-even in the June quarter, the firm said. CJLR's wholesales stood at 16,513 units in the quarter.

Strong recovery in China, improved demand in North America and the UK, provided some relief to Tata Motors overall losses.

"About 98 percent of JLR's retailers are now fully or partially open worldwide. Land Rover Defender, one of the key launches for the year, now has an order book of more than 30,000 units," said P.B Balaji in a media call.

Tata Motors consolidated revenue from operations in the June ended quarter was down by 48 percent to Rs 31,983 crore because of lower vehicle output and sales. JLR accounted for 86 percent of Tata Motor's total consolidated revenue with losses widening to Rs 3,500 crore from Rs 2,391 crore a year ago because of high fixed costs.

Brokerages have mixed recommendations for the stock. CLSA has a 'buy' call on Tata Motors from 'underperform' and also raised its price target from Rs 103 to Rs 135. Kotak Institutional Equities has retained its 'sell' rating on the stock with a target of Rs 90 and said that while the results were better than expected, substantial pick-up in volumes is essential for the company to return to profitability.

Motilal Oswal has a 'buy' rating on Tata Motors with a price target of Rs 127. It expects the company to gradually reduce its losses in the coming quarters and turn to profitability only from the fourth quarter of FY 2020-21.