Tata Motors cracks 29%, most in 26 years; here’s what analysts say

NEW DLEHI: Shares of Tata Motors cracked over 29 per cent in Friday’s trade after the company reported a record Rs 26,961-crore loss in December quarter, largely on account of a massive $3.1 billion pound impairment of JLR assets. The fall was seen as analysts cut earnings target for the company by up to 25 per cent and suggest that more such impairments could be in the offing, they said.

The scrip fell 29.45 per cent to hit a low of Rs 129 on NSE. On BSE, it fell 22.41 per cent to hit a low of Rs 141.90. This was the second worst intra-day fall for the stock in history. The scrip had fallen 40.50 per cent on February 2, 1993.

Post the results, many brokerages see limited upside for the stock.

Edelweiss Securities said it was awaiting clarity over the nature of assets impaired to ascertain the probability of a similar action ahead, given a huge capex programme of 12 billion pound over three years.

“China has gone from bad to worse. The management is trying hard to revive the brand by focusing on sustainable profitability for the company and dealers but given a weak demand outlook, the brokerage cut its FY20 consolidated Ebitda estimate for the auto maker by 8 per cent to Rs 32,900 crore and EPS by 26 per cent to Rs 21.7,” the brokerage said, while slashing the target for the stock to Rs 179 from Rs 201.

Motilal Oswal Securities said it has doubled the net debt estimate for the Tata group company following Q3 numbers. This brokerage has downgraded the stock to Neutral with a target price of Rs 166. Deutsche Bank said operating environment for the company will remain challenging. This brokerage cut FY19 EPS for the firm by 38 per cent and recommended a target of Rs 175 per share.

JP Morgan (Rs 170) and BNP Paribas (Rs 150) are some other brokerages which do not see much upside ahead.

That aid, Jefferies, Maybank, Credit Suisse have set targets in Rs 250-280 range.

The shares of the company closed 17.28 per cent down at Rs 151.30 on BSE.