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Tata Motors share price hitting 10-year low today has this Chinese connection behind it

Tata Motors share price fell 11.51% to Rs 109.55 intra day, a fresh ten-year low, compared to the previous close of Rs 123.80 on BSE.

twitter-logo BusinessToday.In        Last Updated: August 21, 2019  | 19:32 IST
Why Tata Motors share price hit 10-year low in trade today
Tata Motors share price closed 9.29% or 11.50 points lower at Rs 112.30 on BSE.

Tata Motors share price fell to a fresh 10-year low in trade today amid bearish sentiment among traders toward the firm's China business after home-grown Geely Automobile reported dismal earnings for first half of the year. China's Geely Automobile Holdings said first-half net profit skid 40% amid a sustained downturn in the world's biggest auto market, and it forecast an uncertain outlook for vehicle demand for the rest of the year.

This soured sentiments for Tata Motors facing slowdown in sales at home.

Tata Motors share price fell 11.51% to Rs 109.55 intra day, a fresh ten-year low, compared to the previous close of Rs 123.80 on BSE. Tata Motors share price closed 9.29% or 11.50 points lower at Rs 112.30 on BSE.

Auto sector slowdown: Tata Motors, Maruti Suzuki, Mahindra stocks fall up to 55% in one year

Tata Motors share price has lost 58.26% during the last one year and fallen 34.94% since the beginning of this year.

Tata Motors has posted 34 per cent decline in its domestic retail sales at 32,938 units for July 2019, as compared to 50,100 units sold in July 2018, dented by prolonged subdued demand. The cumulative retail sales for the domestic market during April-June quarter fell by 23 per cent at 164,817 units as against 214,679 units sold over the same period last year.

On the global front, Tata Motors reported a 14 per cent decline in its sales at 78,000 units in July 2019 as compared to the same period last year. This figure includes its British arm Jaguar Land Rover (JLR) global sales as well.

Global wholesales for JLR were 41,783 vehicles in the month of July, including Chery Jaguar Land Rover (CJLR) volumes of 4,013 units. CJLR is a JV between JLR and Chery Automobiles and is an unconsolidated subsidiary for Jaguar Land Rover.

However,  Jaguar Land Rover, the UK arm of Tata Motors reported a 40.3% year-on-year rise in China retail sales for July as the company's local turnaround plan began to take effect.

Last week, Crisil lowered its long-term rating amid weakening risk profile of its UK arm Jaguar land Rover.  CRISIL in its release said it has downgraded rating on the long-term bank facilities of Tata Motors (TML) to 'AA-/Negative' from 'AA/Negative', but reaffirmed rating on short term bank facility, commercial paper and short-term debt at 'A1+'.

"Continued weak sales volumes and profitability, coupled with sizeable necessary capex continues to constrain the outlook for free cash flows. Moreover, continued uncertainty around the terms on which Brexit is concluded continues to pose risks to JLR's business profile. An adverse outcome on Brexit for JLR may result in significant disruptions to its supply chain, and elongate its working capital cycle," it said.

Edited by Aseem Thapliyal

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