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Tata Motors shares slump on JLR concerns

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SummaryTata Motors shares fell by 9.6 per cent on Thursday before recovering to close the day at Rs 293.6. The carmaker took a fall of 5.9 per cent after it lowered estimate

Tata Motors shares fell by 9.6 per cent on Thursday before recovering to close the day at Rs 293.6. The carmaker took a fall of 5.9 per cent after it lowered estimate for JLR’s profit margin in October-December quarter. Tata Motors also said JLR will have negative free cash flow and is raising $400 million as long-term debt.

The company also said that the capex for FY’14 could increase from £2 billion earlier to £2.75 billion. The shares have fallen by 10.5 per cent over the last four trading sessions.

While the company has projected higher revenues for JLR for the quarter ended December 2012, it has also listed out the stress factors.

“EBITDA is likely to be in the region of levels reported for the previous two quarters and EBITDA margin is likely to be slightly lower than in the previous two quarters, primarily reflecting less favorable exchange rates, the ongoing effect of a higher mix of Evoque sales and other factors,” said the company in a trading update on its website.

Research houses are saying that the problem for the company may spill over to FY’14 on the back of an adverse currency movement and a weak product mix.

Tata Motors has, however, maintained that it will continue to target funding most of its capital spending out of operating cash flow.

HDIL reassurances fail, share slides 22.44%

An executive at Housing Development & Infrastructure Ltd, whose shares have plummeted on market speculation over its debt repayments, denied on Thursday it was in financial trouble.

The company’s share price tumbled anew by 22.44 per cent after already falling 20.4 per cent in the previous two sessions. The losses, triggered when the company said its vice chairman and co-founder cut his stake by more than half, has wiped Rs 195 crore from HDIL’s market value.

“There have been lots of rumours in the market about bankruptcy and defaults, which we totally deny,” said Hari Prakash Pandey, vice-president of finance at HDIL, on a conference call with investors.

“We are very comfortable with the debt repayment schedule and we are as per schedule,” he added.

The fall in HDIL’s share price highlights concerns about the high debts at property developers, which are facing trouble paying back interest at a time of slowing sales. Reuters

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