Tata Motors slips 3% on dismal Q4 numbers; CLSA maintains sell

TATAMOTORS

Shares of Tata Motors declined 3.6 percent in the early trade on May 21 after company reported weak set of numbers for the quarter ended March 2019.

The company has reported a 49 percent fall in its consolidated net profit at Rs 1,108 crore. The company had reported a profit of Rs 2,175 crore in a year ago period.

Revenue of the company declined to Rs 86,422 crore against Rs 89,928.97.

CLSA has maintained sell call on the stock with a target at Rs 150 per share

According to CLSA, the JLP outlook remains weak, while Indian business margin slipped QoQ despite higher volume.

JLR cut margin guidance range & cash flow outlook for FY21. The guidance cut underlines challenges of improving profitability.

It feels that India’s truck industry should also enter a downturn and cut FY20-21 eps estimates by 18-22%.

Morgan Stanley has equal-weight rating on the stock with a target at Rs 184 per share.

The pace of JLR recovery has been slower than we expected, while JLR EBIT margin will remain in 3-4% range over FY20-21, said Morgan Stanley.

Company guides for JLR FCF to remain negative for FY20 & FY21 and economic, political & technological risks keep us equal-weight, it added.

Citi has maintained buy rating on Tata Motors and cut target to Rs 220 from Rs 230 per share.

It feels that H1FY20 outlook is expected to remain muted. The JLR EBITDA of £696 million is 12% below estimates on higher material costs.

In China, inventory is still high at 1.8 months, despite volume cuts.

At 09:29 hrs Tata Motors was quoting at Rs 183.80, down Rs 6.20, or 3.26 percent on the BSE.

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