With the coronavirus pandemic crippling demand for automobiles worldwide, Tata Motors is worth nothing without its luxury unit Jaguar Land Rover, according to CLSA.
The $3.7 billion Indian auto firm faces a significant increase in debt due to the crisis, and its plan to deleverage may be delayed by four to six quarters, CLSA said. It has already received a lifeline from parent Tata Sons in the form of a preferential equity allotment, and the brokerage thinks further aid could be required.
The virus has also been a setback for Jaguar Land Rover, which was beginning to show signs of a turnaround late last year from the combined negative impact of a slowdown in China, Brexit and European emissions rules. Tata Sons had been looking for a strategic partner for the business but pledged it wouldn’t sell JLR.