Tata Motors hits lowest level since September 2011 as stock skids 7%

Shares of Tata Motors slipped almost 8-year low of Rs 137, down 7 per cent on the BSE on Monday, as analysts lowered estimates in view of the challenges in Jaguar Land Rover (JLR) business and ongoing slowdown in the domestic operations.

The stock of commercial vehicles maker was trading at its lowest level since September 13, 2011, when it touched Rs 136 in the intra-day trade.

Tata Motors was the largest loser among the S&P BSE Sensex, which was down 0.55 per cent at 37,672 levels at 03:17 pm. In the past three months, the stock has tanked 36 per cent, as compared to a 4 per cent decline in the Sensex.

The company has delivered a lackadaisical operating performance in April-June quarter (Q1FY20) with hefty net consolidated loss led by deterioration in EBITDA (earnings before interest, tax, depreciation and amortization) margin amid challenging global business environment for the automobile industry. Its JLR unit as well as standalone performance deteriorated with both the businesses reporting weak performance.

In light of massive slowdown in JLR’s business, higher debt level and expected cash crunch, analysts at Reliance Securities maintain ‘REDUCE’ recommendation on the stock with a revised SOTP-based target price of Rs 131 (from Rs 135 earlier).

“While volumes for JLR appear to have bottomed out, a profitable recovery with cash generation would be very gradual and challenging in a disruptive environment for the global automotive industry (particularly for luxury cars). FY21 could be a challenging year for India as well as JLR (run-out of most profitable RR/RR Sport). Further, the noise around electric vehicles, Brexit and trade war adds to the uncertainty,” analysts at Motilal Oswal Securities had said in result update with ‘neutral’ rating on the stock.