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Tata Motors Q3: Demand trends for JLR, impact of forex hedge loss eyed

Tata Motors is scheduled to report it December quarter earnings today. The result will be watched for current demand trends for JLR and outlook for key markets.

Surbhi Jain  |  New Delhi 

Tata Motors

Automobile major is scheduled to report it today. The result will be watched for current demand trends for and outlook for key

posted a consolidated net loss of Rs 1,009 crore for the second quarter ended September 30, 2018, mainly due to a weak performance by its British arm (JLR). The company had reported a net profit of Rs 2,501.67 crore in the July-September quarter of 2017-18. Total revenue from operations had risen 3.3 per cent to Rs 72,112.08 crore as compared to Rs 69,838.68 crore in the year-ago period. revenue, however, declined 11 per cent to 5.6 billion pounds.

Here’s what top brokerages expect from December-quarter result

Consolidated revenues are estimated to grow 4.5 per cent year-on-year (YoY) (+7.4 per cent quarter-on-quarter (QoQ), with EBITDA (Earnings before interest, tax, depreciation and amortization) margin contracting 70bps YoY to 10.8 per cent. We estimate consolidated PAT of Rs 410 crore.

We expect JLR’s (including JV) volume to decline by 8.7 per cent YoY (+11 per cent QoQ), impacted by slow demand and deferment of purchase in China due to the reduction in import duty.

JLR’s net realization is expected to increase by 1.8 per cent YoY (+0.2 per cent QoQ). JLR’s EBITDA margin would contract 20bp YoY (+160 bp QoQ) to 10.7 per cent. We cut FY19/20 consolidated PAT (profit after tax) by 15 per cent/3 per cent. For JLR, we marginally raise our volume and margins estimates. The stock trades at 7.7x FY20E EPS. We maintain ‘Buy’ rating.

Key monitorables include current demand trends for and outlook for key markets, demand trend in domestic and new product launch, and impact of forex hedge loss.

ICICI Securities

We expect challenging times to continue at Tata Motors amidst nearly flat volumes in the domestic business (1.72 lakh units) and likely 7.4 per cent decline in volumes at JLR (1.47 lakh units). At JLR, with focus on cost control, we expect EBITDA margins to improve 40 bps QoQ to 9.5 per cent. On a consolidated basis, sales in Q3FY19 are expected at Rs 78,340 crore, up 6.7 per cent YoY. EBITDA is expected at Rs 8,614 crore (EBITDA margins at 10.9 per cent, flat QoQ). At the PAT level, we expect Tata Motors to report a profit of Rs 486 crore (Rs 1,215 crore in Q3FY18).

Prabhudas Lilladher

The standalone domestic volumes over Q3FY19 were flat YoY, down nearly 10 per cent QoQ. Further, on account of higher discounting in the industry, we expect standalone margins to be at 7.3 per cent, down 120bps YoY as well as QoQ. JLR’s Q2FY19E volumes are expected to be flat YoY, up nearly 14 per cent QoQ, with margins at 11.4 per cent, higher 50bps YoY, up 230bps QoQ.

Company Name BDP_Date BDP_Close BDP_Date1 BDP_Close1 Change (%)
Cummins India Ltd. 06-Feb-2019 801.15 28-Sep-2018 674.70 18.74166296
Bajaj Auto Ltd. 06-Feb-2019 2771.45 28-Sep-2018 2687.10 3.139071862
S&P Bse Sensex 06-Feb-2019 36975.23 28-Sep-2018 36227.14 2.064998783
Hero MotoCorp Ltd. 06-Feb-2019 2875.15 28-Sep-2018 2932.15 -1.943966032
Maruti Suzuki India Ltd. 06-Feb-2019 7191.10 28-Sep-2018 7350.55 -2.169225432
Bosch Ltd. 06-Feb-2019 19240.50 28-Sep-2018 19817.45 -2.911323102
MRF Ltd. 06-Feb-2019 60052.65 28-Sep-2018 63677.65 -5.692735206
Apollo Tyres Ltd. 06-Feb-2019 198.85 28-Sep-2018 212.35 -6.357428773
S&P Bse Auto 06-Feb-2019 19262.54 28-Sep-2018 21476.52 -10.30883961
TVS Motor Company Ltd. 06-Feb-2019 491.00 28-Sep-2018 557.20 -11.88083274
Eicher Motors Ltd. 06-Feb-2019 21110.20 28-Sep-2018 24165.25 -12.64232731
Exide Industries Ltd. 06-Feb-2019 218.80 28-Sep-2018 265.15 -17.48067132
Mahindra & Mahindra Ltd. 06-Feb-2019 694.55 28-Sep-2018 860.70 -19.30405484
Motherson Sumi Systems Ltd. 06-Feb-2019 137.50 28-Sep-2018 171.20 -19.68457944
Bharat Forge Ltd. 06-Feb-2019 481.75 28-Sep-2018 601.00 -19.84193012
Tata Motors Ltd. 06-Feb-2019 178.20 28-Sep-2018 223.45 -20.25061535
Balkrishna Industries Ltd. 06-Feb-2019 786.00 28-Sep-2018 1019.55 -22.90716493
Ashok Leyland Ltd. 06-Feb-2019 82.50 28-Sep-2018 119.05 -30.70138597
Source: ACE Equity

First Published: Thu, February 07 2019. 11:01 IST