Tata Motors stock has, however, zoomed 33 per cent from its March low of Rs 63.60 apiece, while the stock is over 52 per cent off from its 52-week high touched in January this year.
Tata Motors share price fell as much as 5 per cent to hit an intraday low of Rs 95.40 apiece on BSE, a day after the company reported its highest quarterly loss in the January-March 2020 period. The company posted a consolidated net loss of Rs 9,894 crore for the quarter ended March 31, as compared to a consolidated net profit of Rs 1,108 crore in the same period of the preceding year. Tata Motors stock has, however, zoomed 33 per cent from its March low of Rs 63.60 apiece, while the stock is over 52 per cent off from its 52-week high touched in January this year. Post Q4 earnings, research and brokerage firms are bullish on the stock with an upside of up to 22 per cent. “Tata Motors’ 4QFY20 performance fully reflects the impact of COVID-19 in JLR’s key market, China. This, coupled with the initial impact in other geographies and an all-round miss in India, led to sharp miss in operating performance,” said Motilal Oswal Institutional Equities in its latest research report.
From current levels, Tata Motors share price will have to jump 22 per cent to reach the target price of Rs 122 per share predicted by Motilal Oswal Institutional Equities. JLR’s operating performance was adversely impacted by lower sales from China and higher VME (variable marketing expenses), which hurt realizations, the report added. Tata Motors informed that it is seeing an encouraging recovery in China with all its dealers now open, and with sales of 6,828 vehicles in April, down just 3.1 per cent year-on-year, and 8,068 in May, up 4.2 per cent year-on-year. “The India PV business aims to turn cash positive by FY23 by improving the contribution margin and further reducing fixed cost,” said the brokerage firm.
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Another research and brokerage firm JM Financial has also given a ‘buy’ rating to the stock with a price target of Rs 120, an upside of 20 per cent from yesterday’s close. Tata Motors said that the auto industry faced strong headwinds in FY20 amidst a slowing economy due to multiple factors – liquidity crisis, high fuel prices, changes in axle load norms and BS6 transition, all leading to weak consumer sentiments and subdued demand across segments. “In China, we are beginning to see recovery in vehicle sales and customers
are returning to our showrooms. Our operational fitness gives me confidence that we can weather this storm,” said Ralf Speth, JLR Chief Executive.
As lockdowns have eased across the globe, 89% of JLR dealerships are now operational. The company is focused on maximising wholesales of inventory produced before the shutdown (now reduced from 45k units to 18k units), JM Financial report added. “Due to BS6 transition and simultaneous impact from COVID-19, Tata Motors’ standalone margin declined 1170bps YoY/600bps QoQ to negative 4.4%. Recovery in standalone business stays contingent upon economic recovery as COVID-19 situation normalises, TTMT’s ability to plough back PV market share and scrappage policy,” JM Financial said in its recent report.