Tata Motors hits 8-month high post JLR December retail sales numbers

Shares of Tata Motors hit an eight-month high of Rs 199, up 3 per cent on the BSE on Friday after its UK arm Jaguar Land Rover (JLR) reported retail sales of 52,814 vehicles for December 2019, up 1.3 per cent from the previous year. The stock of Tata Group commercial vehicles major was trading at its highest level since May 7, 2019.

“For the month of December, JLR retail sales were boosted by China (up 26.3 per cent year-on-year), a sixth successive month of double-digit growth. This offset lower sales in North America (-1 .1 per cent), UK (-2.9 per cent), Europe (-5.3 per cent) and in Overseas markets (-7.6 per cent),” Tata Motors said in a press release.

Felix Brautigam, Jaguar Land Rover Chief Commercial Officer, said “Over the last six months we saw a marked improvement in China, where intensive work with our retailers, combined with significant process and product improvements are starting to gain traction. Elsewhere, adverse market conditions continued to affect the industry, but encouragingly in North America we closed 2019 successfully with a new record year.”

Meanwhile, analysts expect Tata Motors to report first quarter of growth in October-December quarter (Q3FY20) after six consecutive quarters of a decline in profit. 

Analysts expect Tata Motors’ consolidated EBITDA (earnings before interest, tax, depreciation and amortisation) margin to improve on an expansion in JLR’s margins due to better mix and cost-reduction efforts. Standalone margins are expected to contract on a lower scale, adverse mix and higher discounts.

“We expect Tata Motor’s consolidated revenues to decline year-on-year (YoY), mainly due to a steep fall in standalone revenues amid a 25 per cent drop in volumes. JLR’s GBP revenues are expected to decline by 2 per cent due to a 5 per cent drop in volumes,” Emkay Global Financial Services said in a sector update.

“Standalone volume fell by 25 per cent YoY, while JLR volume is expected to grow by 2 per cent YoY, which will improve its consolidated revenues and earnings. Despite deterioration in standalone performance, JLR’s strong performance would drive overall consolidated profitability. INR depreciation would inflate PAT to some extent,” analysts at Reliance Securities said in results review.

In the past one-month, Tata Motors outperformed the market by surging 20 per cent on foreign portfolio investors (FPIs) buying. In comparison, the S&P BSE Sensex was up1.5 per cent during the month.

After promoter Tata Sons injected around Rs 6,500 crore through preferential issue, FPIs bought an additional nearly 1 percentage point stake in Tata Motors.

Between December 13, 2019 and December 31, 2019, FPIs purchased 19.05 million equity shares, representing 0.61 per cent stake of Tata Motors. At the end of December quarter, their stake in the company increased to 18.32 per cent from 17.71 per cent as on December 12, 2019, according to latest shareholding pattern filed by the company. Domestic mutual funds, however, reduced their stake from 7.87 per cent to 7.29 per cent during the same period, data shows.