Tata Motors slips 4% after reporting Rs 9,864 cr net loss in March quarter

Shares of Tata Motors dipped 4 per cent to Rs 96.30 on the BSE after posting a consolidated net loss of Rs 9,863.73 crore in the fourth quarter ended March 31 (Q4FY20).


The company's revenue from operations stood at Rs 62,492.96 crore in the quarter, compared with Rs 86,422.33 crore in the corresponding quarter last year, with the coronavirus-induced lockdown taking a toll on British arm JLR as well as its domestic business.


On a standalone basis, the company reported a net loss from continuing operations at Rs 4,871.05 crore during the quarter. whie Jaguar Land Rover (JLR) reported a loss of 501 million pounds in the quarter under review. JLR's revenue came in at 5.4 billion pounds


For the full financial year 2019-20, Tata Motors reported a consolidated net loss of Rs 11,975.23 crore and total revenue from operations stood at Rs 2,61,067.97 crore. JLR reported a net loss of 422 million pounds while the revenues were at 23 billion pounds for the entire fiscal year.


In India, demand that was already adversely impacted by the general economic slowdown, liquidity stress and stock corrections due to the BS-VI transition, was further affected by the lockdown. Steep volume decline, particularly medium and heavy commercial vehicles, and resulting negative operating leverage impacted profitability and cash flows, Tata Motors said


As for JLR, the company said that after the British arm's return to profit in second and third quarters, which reflected improvements achieved through its transformation programme, fourth quarter results were significantly impacted by the coronavirus pandemic


In order to move forward to a sustainable business, the company said it planned a rigorous regimen to conserve cash.


Outling the details, Tata Motors Group Chief Financial Officer P B Balaji said in a conference call that the company plans to deleverage its entire business with focus on cost and cash savings in both JLR and the domestic business


With lockdowns in the first quarter, the company said it expects significantly lower sales in the quarter and negative free cash flow of about Rs 5,000 crore in the April-June quarter of the current fiscal


Tata Motors' total wholesales, including exports, declined by 35.1 per cent in 2019-20 to 4,75,207 units Similarly, it reported a 37.4 per cent dip in its domestic passenger vehicle volumes in 2019-20


Earlier in the session, the stock had inched 3 per cent higher to Rs 103.50 on the BSE before paring gains. At 10:18 AM, the stock was trading at Rs 97.25. Around 5 crore shares have changed hands on the BSE and NSE, combined, so far.


Brokerage Motilal Oswal maintained 'Buy' on the stock with the target price of Rs 122 but lowered the Ebitda estimates for FY21 and FY22.


"TTMT’s 4QFY20 performance fully reflects the impact of COVID-19 in JLR’s key market, China. This, coupled with the initial impact in other geographies and an all-round miss in India, led to sharp miss in operating performance. A small positive was the FCF positivity of GBP225m in 4Q." the brokerage said in a note.


"We lower our FY21/FY22 EBITDA by 18%/0% to factor near-term volume weakness, Fx movement, and the impact of COVID-19 on cost structures in both JLR and the India business. As a result, both FY21/FY22 would witness PAT loss. The stock trades at 2.9x FY22 EV/EBITDA and 0.8x P/BV. Maintain Buy," it said.


Analysts at Emkay maintained 'Hold' on the stock


"TTMT is relatively more vulnerable than other OEMs, owing to high fixed cost, weak Net Debt/EBITDA situation (3.6x as of Mar’20). We retain Hold rating on the stock with a TP of Rs92 (Rs78 earlier) based on EV/EBITDA of 2x/8x on FY22 estimates for JLR/standalone divisions and value of other businesses/investments at Rs42/share. Increase in TP has been supported by

reduction in net debt position, and increase in value of investments. Key downside risks include lower-than-expected demand in key segments, failure of new launches and adverse currency/commodity prices," it said.