Tata Motors hits fresh 52-week low; slips over 20% in two months

In past two months, the stock of automobile major slipped 24% as compared to nearly 3% rise in the Sensex.

Shares of Tata Motors continued to witness selling pressure and were down 2.3% at Rs 393, hitting a fresh 52-week low on the BSE.

In the past two months, the stock of automobile major slipped 24% from Rs 516 on concerns about a slowdown in China. The S&P BSE Sensex gained nearly 3% during the same period.

Tata Motors had reported a sharp 56% year on year drop in its consolidated net profit in the final quarter of last financial year as China, Jaguar Land Rover’s (JLR) biggest market, slowed down considerably.

For the April-June 2015 quarter, Kotak Institutional Equities expects standalone operations of Tata Motors to remain under pressure due to losses in the passenger car business.

“We estimate JLR volume to increase by 4% yoy. We forecast JLR EBITDA margin to decline by 50 basis points (bps) qoq led by slight increase in discounts. Major increase in discounts in Evoque is likely to impact JV profitability, in our view,” added report.

Analyst at Edelweiss Securities said Tata Motors is likely to see contraction (down 210 bps) due to unusually high profitability of JLR in Q1FY15 (all-time high margins of 20.3%).

However, sequentially we expect JLR’s margins to improve by around 20bps QoQ, led by favourable product/geography mix though partly offset by adverse currency, analyst said in a Q1 results preview.

Phillip Capital India Research said Tata Motors to post a sluggish quarter due to weak product/geography mix at JLR.