Tata Motors Falls 5% On Massive Q4 Loss; But Analysts Have "Buy" Rating On The Stock

On Tuesday, Tata Motors shares declined about 5 percent to Rs 95.20 as the company reported a staggering consolidated loss of Rs 9,864 crore for the March ended quarter. In comparison, the automaker made a net profit of Rs 1,108.66 crore in the same period last year.

The company's flagship subsidiary, Jaguar Land Rover (JLR) suffered a loss of £501 million for the March quarter and £422 million for the full year on revenues of £5.4 billion and £23 billion, respectively.

"After Jaguar Land Rover's return to profit in the second and third quarters, which reflected improvements achieved through its transformation programme, fourth quarter results were significantly impacted by the pandemic. In India, demand which was already adversely impacted by the general economic slowdown, liquidity stress and stock corrections due to BSVI transition, was further affected by the lockdown," Tata Motors said in a release.

However, analysts are optimistic on the stock and mostly have 'buy' ratings on it, as they see its cost-saving drive, product pipeline and stimulus in developed economies to show results. Edelweiss Securities has a buy rating on Tata Motors saying that the company's balance sheet improvement remains on course.

These ratings are despite the automaker being upfront on recognising that its June quarter results will be significantly weaker for both JLR and Tata Motors, as the earnings are going to reflect the full impact of lockdowns. But, the company anticipates a gradual improvement in performance in the coming quarters, on the back of a new product range along with a robust cost and cash savings agenda.

Antique Stock Broking and Emkay Global also have 'buy' ratings on the stock.

Tata Motors has been working to bring its debt to a sustainable level and taken measures to lower cash burn. It has a total net automotive debt of Rs 48,200 crore, including Rs 5,900 crore of leases.

The company has recognised the current debt level as unsustainable but has not fixed a specific target on debt reduction, a process the automaker believes is a continuous exercise in enhancing financial efficiency.

JLR's had started a cost control programme called 'Project Charge' which has aimed to save £5 billion by the end of the current financial year. So far, the cost control programme has resulted in savings worth £3.5 billion, including savings of £1.9 billion in investment, £600 million in working capital and the remaining from the overheads, manufacturing and material costs.