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Tata Motors share rises 8% despite Rs 8,443-crore loss in Q1; here's why

Share price of Tata Motors rose 8.31%  to Rs 113.40 against previous close of Rs 104.70 on BSE

twitter-logoBusinessToday.In | August 3, 2020 | Updated 11:38 IST
Tata Motors share rises 8% despite Rs 8,443 crore loss in Q1; here's why
Tata Motors share price trades higher than 5 day, 20 day, 50 day and 100 day moving averages but lower than 200 day moving averages.

Tata Motors share price gained over 8% in early trade today after the auto maker reported earnings for June quarter.  Share price of Tata Motors rose 8.31%  to Rs 113.40 against previous close of Rs 104.70 on BSE. The large cap stock has risen after 6.89% in two days. The share trades higher than 5 day, 20 day, 50 day and 100 day moving averages but lower than 200 day moving averages.

Market cap of Tata Motors rose to Rs 33,700 crore today. The stock has lost 15.81% during the last one year and fallen 40.6% since the beginning of this year. However, in last one month, the stock has gained 6.28% against 3.25% rise in Sensex during the period.  The stock hit 52-week high of Rs 201.80 on January 15 this year and fell to 52-week low of Rs 63.60 on March 24, 2020.

Total 71.92 lakh shares changed hands amounting to turnover of Rs 79.76 crore. The Tata Group firm reported a consolidated net loss of Rs 8,443.98 crore in Q1 against net loss of Rs 3,679.66 crore in the year-ago quarter.  Total income from operations in Q1 stood at Rs 31,983.06 crore against Rs 61,466.99 crore in the corresponding quarter of the last fiscal.

The company''s British arm Jaguar Land Rover (JLR) reported a 44 per cent dip in net revenue at 2.9 billion pounds during the first quarter.  The company''s British arm Jaguar Land Rover (JLR) reported a 44 per cent dip in net revenue at 2.9 billion pounds during the first quarter.

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Its pre-tax loss for the period stood at 413 million pounds as compared to the same period a year ago. During the quarter, JLR reported a 42.4 per cent decline in its global retail sales at 74,067 units.

However, brokerages are bullish on the share of the firm.

CLSA  said Q1 significant beat driven by aggressive cost reduction. Both JLR and India surprised on EBITDA & FCF despite volume declines of 45-82% YoY. Management continues to guide for positive FCF in 2Q-4QFY21 and FY22. The brokerage upgraded stock to Buy with a target price of Rs 135.

CITI said Q1 of FY21 was better than (muted) expectations. It maintained a buy stance on the stock with a target price of Rs 155.  The brokerage expects multiple drivers for JLR's volume improvement, which should boost profits, due to operating leverage. 

Credit Suisse  said valuations of stock were benign. JLR trades at close to bottom of its historical range. It raised target price of the stock to Rs 113  and expects EPS to rise by 1-2% in FY21-23.

Motilal Oswal said, "We expect losses to gradually reduce in coming quarters and turn profitable only from 4QFY21. We have lowered our FY21E loss estimates by 8% to factor in faster JLR volume recovery and cost cutting initiatives." The brokerage maintains buy with target price of Rs 127.

Tata Motors share price closes higher ahead of Q1 earnings

Tata Motors Q1 results: Second straight quarterly loss at Rs 8,438 crore as COVID-19 disrupts sales

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