Moneycontrol
Aug 10, 2017 05:15 PM IST | Source: Moneycontrol.com

Tata Motors tanks 9% as analysts cut earnings estimates post subdued Q1 nos

Edelweiss also lowered its FY18/19 EPS by 20/10 percent to Rs 33/44.7. The research house maintained its hold rating on the stock with a target price of Rs 444.

 
 
live
  • bselive
  • nselive
Volume
Todays L/H
More

Tata Motors shares hit 15-month closing low on Thursday as analysts slashed earnings estimates for current and next financial year after disappointing Q1 numbers. However, JLR's margin may improve in second half of FY18, analysts feel.

The stock closed below the 400 level after long time, down 8.6 percent at Rs 380.90 on the BSE.

"We have downgraded consolidated EPS by 27/7 percent for FY18/19, factoring in cost pressures in Jaguar Land Rover and a stronger rupee, but upgraded S/A EPS (lower interest and depreciation)," Motilal Oswal said while maintaining buy rating with a target price of Rs 542.

The research house lowered its EV/EBITDA multiple for JLR to 3x (versus 3.5x) to factor in high volatility in performance.

Edelweiss also lowered its FY18/19 EPS by 20/10 percent to Rs 33/44.7. The research house maintained its hold rating on the stock with a target price of Rs 444.

Tata Motors' Q1FY18 consolidated EBITDA of Rs 5,000 crore (down around 45 percent YoY) came 26 percent below estimate, Edelweiss said.

JLR's EBITDA margin nosedived to 7.9 percent (down around 600 basis points YoY) on higher commodity/marketing costs, adverse regional mix and operating deleverage. Net realisation increased 4 percent QoQ (up 7 percent YoY).

"We had evinced our concern on margins due to aging portfolio. However, we expect JLR's margin trajectory to improve over next 2 quarters on improving mix and waning impact of adverse hedge book from Q4FY18. An aging model portfolio (revenue weighted basis) and weak demand environment in key markets would nevertheless restrict sharp margin expansion," Edelweiss said.

Tata Motors' first quarter earnings missed analysts' expectations on all parameters on Wednesday. One-time gain related to JLR pension plan boosted profitability but excluding that one-off item, it would have been in a loss due to forex losses.

Consolidated profit grew sharply by 41.6 percent year-on-year to Rs 3,200 crore, driven by one-time gain of Rs 3,609 crore relating to recent changes designed to improve the sustainability of JLR's defined benefit pension plans.

Jaguar Land Rover guides for EBITDA margin in FY18 to remain stable compared to FY17 at around 12 percent, with Q1 being the worst quarter. Variable marketing spend will remain at higher levels in FY18. It expectss forex hedge losses to reduce gradually over next two quarters, with significant reduction Q4FY18 onward.

Initial response to Velar is positive, with three months of waiting period; new Discovery has two-month waiting, JLR said.
Sections
Follow us on
Available On