Once the country's most-valued auto maker, Tata Motors now commands a market cap
less than half to Maruti Suzuki’s. The company saw its market value erode by over Rs 10,000 crore on Thursday with its stock crashing more than eight per cent, a day after first quarter financial results were announced.
Tata Motors’ scrip hit a 52-week-low of Rs 376 on Thursday and closed at Rs 380.90, down 8.6 per cent at BSE. In effect, it has lost market value worth Rs 62,850 crore in the past 11 months.
The country’s biggest carmaker Maruti Suzuki, which overtook Tata Motors to become the country’s most-valued auto maker
in July 2015, now commands a market cap
of Rs 229,309 crore. The stock has surged 39 per cent since January this year and now also values more than the combined market cap
(Rs 196,273 crore) of the two peer companies — Tata Motors (Rs 109,979 crore) and Mahindra & Mahindra (Rs 86,294 crore).
Tata Motors reported a consolidated profit of Rs 3,200 crore for the April-June quarter, 42 per cent higher to previous year due to a one-time gain of Rs 3,609 crore from Jaguar Land Rover’s pension plans.
The standalone business (which primarily includes the domestic commercial and passenger vehicle) reported a loss of Rs 467 crore, against Rs 26-crore profit in the corresponding period of previous year. High discounts and declining volumes in the commercial vehicle business impacted the company’s performance. Margin pressures in both the standalone business (due to declining volumes and heightened discounting) and JLR (on account of higher material costs and variable marketing expenses particularly in the US market) led to operating profit almost halving on a year-on-year basis in the quarter.
Brokerage firm Sharekhan maintains a ‘neutral’ view on the stock. Analysts have slashed earnings FY18 and FY19 forecasts for the company. Most analysts continue to give a ‘buy’ call for Maruti Suzuki, which is clocking a double-digit growth in car sales year after year.
Maruti has also captured about half of the domestic passenger vehicle market. A waiting period on its volume models like the Baleno, Brezza and Dzire is seen as a positive trigger for the company. The addition to capacity from Suzuki’s Gujarat plant is helping volume growth. The Suzuki-owned company reported a 4.4 per cent increase in profit to Rs 1,556 crore for the quarter-ended June. A higher deferred tax provision, firm commodity prices, sales and marketing expenses, and compensation to dealers for transition to the new goods and services tax had impacted their margins.