Tata Motors trades flat ahead of Q1 earnings; here's what to expect

In Q1FY21, Tata Motors' stock rose 44.2 per cent as compared to S&P BSE Sensex's 18.48 per cent gain in the same period

Shares of Tata Motors were trading almost flat ahead of its financial results for the quarter ended June 30, 2020. Analysts are expecting over 50 per cent year-on-year (YoY) fall in the company's overall revenues while consolidated net loss may widen to as high as 9,810 crore, owing to sharp fall in volumes due to the Covid-19 induced lockdown. 

At 9:40 am, the stock was trading 0.19 per cent higher at Rs 103.90 as compared to an absolutely flat benchmark S&P BSE Sensex. The stock rose as high as Rs 104.65 and hit an intra-day low of Rs 103.05. Around 65.2 lakh shares have changed hands on the NSE and BSE combined, so far.

In the June quarter of FY21, Tata Motors' stock rose 44.2 per cent as compared to S&P BSE Sensex's 18.48 per cent gain in the same period.

Here's what brokerages expect from Tata Motors' Q1FY21 results

Emkay

Analysts at Emkay expect Tata Motors' consolidated revenues to decline over 50 per cent YoY to Rs 30,187.1 crore. Standalone revenues are seen declining by 81 per cent due to an 82 per cent drop in volumes to 25,047 units while JLR’s GBP revenues are expected to decline by 47 per cent due to a 42 per cent drop in volumes to 75,298 units (including JV). Overall, the company's loss may widen to Rs 6,961.2 crore from the loss of Rs 3,452 crore reported in Q1FY20.

On the operational front, the brokerage pegs Tata Motors' earnings before interest, depreciation, and ammortisation (Ebitda) loss at Rs 1,605.4 crore while overall Ebitda margin may contract from 4.9 per cent to -5.3 per cent on a YoY basis. JLR Ebitda margin is expected at -3.1 per cent. Furlough support (around 50 per cent of JLR employees) from government might help lower the employee cost. 

ICICI Securities

ICICI Securities expects Tata Motors' topline to decline 49 per cent YoY to Rs 31,333.7 crore with the standalone business expected to witness revenue decline of around 84 per cent YoY. It pegs the company's overall loss at Rs 8,640.1 crore while JLR may report loss of around 614 million pounds. The company's overall Ebitda loss is seen at Rs 1,896.1 crore while Ebitda margin may come in at -6.1 per cent for the quarter. JLR's Ebitda margin is seen at -4.9 per cent, down 912 bps YoY. 

"Demand and inventory situation globally, discounting trends across JLR’s key markets, outlook on capital expenditure and R&D, domestic business turnaround strategy remain the key monitorables," the brokerage said.

Motilal Oswal

Analysts at Motilal Oswal are building an even steeper fall of 58.6 per cent YoY in Tata Motors' revenues at Rs 25,550 crore and an overall loss of 9,810 crore. Overall Ebitda loss is seen at Rs 3,010 crore with India business having adverse mix (CVs contribution at 42 per cent to volumes against 73 per cent YoY v/s 68 per cent QoQ). Ebitda margin might come in at -11.8 per cent as compared to 4.9 per cent in Q1FY20.

As for JLR, the brokerage says, "JLR to see some benefit of China restarting in 1Q (retails in China down just 2.5 per cent). JLR mix improvement to play out with higher share of Land Rover and China. Also, cost cutting to aid the second half (2H) performance."