For Tata Motors, JLR Performance Is Likely To Remain Weak
Tata Motors is all set to report its quarterly earnings on Wednesday. The impact of forex hedge losses, demand outlook for UK subsidiary JLR and updates on China joint venture with Cherry will be keenly watched.
For Tata Motors, JLR performance is likely to remain weak, but should improve sequentially. We forecast JLR’s Ebitda margin at 8.6 per cent, down 320 bps YoY on lower volumes.
It was expected that EBIT margins at minus 1 per cent, and 220 million pound in forex hedging losses in the quarter.
HDFC Securities expects the company to report consolidated revenue growth of 3 per cent hurt by a 12 per cent fall in JLR revenues. The domestic business is expected to report 35 per cent YoY jump in revenues.
The brokerage expects JLR’s EBitda margin to contract 374 bps YoY to 8.2 per cent led by negative operating leverage.
Brokerage said that consequently, we expect PAT loss of 119 million pound (against loss of 210 million pounds in Q1 and profit of 308 million pound in 2QFY18. Standalone EBITDA margin would come at 9.4 per cent up 297 bps YoY, led by operating leverage.
Experts noted that JLR is investing aggressively in technologies amid an uncertain business outlook, thereby generating negative free cash flows and stressing its balance sheet.