Brexit brutalises TCS, Tata Steel, Tata Motors shares

By: | Updated: June 25, 2016 7:20 AM

In FY15, the company had earned 13.4% of its revenue from the UK and over 12% from the rest of Europe. In FY2015, when the average value of the British pound was 98.59 against the Indian rupee, Tata Motors had earned Rs 35,129.2 crore of its revenue from the UK.

tata steel-reu-LWhile Tata Steel doesn’t separately reveal its revenue from the UK, analysts estimate the steel major earning roughly half of its European revenues or over a quarter of its full revenue from the country. (Reuters)

With the Brits deciding to exit the European Union, much to the shock of the financial markets, shares of Indian companies, much like their peers in the rest of the world, saw one of their worst days in recent times. Special punishment, however, was reserved for shares of several Tata Group companies that have significant exposure to the United Kingdom.

Shares of Tata Motors, for instance, lost 8.3%. In fact, at their lows, they were down as much as 13.7%.

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The reason?

In FY15, the company had earned 13.4% of its revenue from the UK and over 12% from the rest of Europe. In FY2015, when the average value of the British pound was 98.59 against the Indian rupee, Tata Motors had earned Rs 35,129.2 crore of its revenue from the UK. With the British pound shutting shop at 93.29 vs the Indian rupee, its revenue from the UK could be lower by over Rs 1,692 crore in FY17 just on the basis of currency depreciation.

Also read | TCS, Infosys, Wipro set to face Brexit music; here’s why

“For Jaguar Land Rover, today is just business as usual. We are a British business with a strong manufacturing base in this country, we call Britain home and we remain committed to all our manufacturing sites and investment decisions. There will be a significant negotiating period, and we look forward to understanding more about that as details emerge,” the company said in a statement on Friday.

While Tata Steel doesn’t separately reveal its revenue from the UK, analysts estimate the steel major earning roughly half of its European revenues or over a quarter of its full revenue from the country. Shares of Tata Steel fell 6.6% on Friday with volumes almost three times of their 10-day average.

Wire services quoted a Tata Sons spokesperson as saying that the group has 19 independent companies in the UK and that each company continuously reviews its strategy independently.

Interestingly, Tata Global Beverages, which earned over 18% of its consolidated revenue from the UK, saw its shares falling just 2.6%.

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