Tata Motors is likely to continue to report loss in the quarter ended in September year-on-year (YoY), dented by weak business in India. But, sequentially, the performance may be better due to improvement at Jaguar Land Rover level.
According to brokerages, the consolidated loss could be in the range of Rs 800-1,500 crore for September quarter against loss of Rs 1,048.8 crore in the year-ago period but could be far lower than loss of Rs 3,680 crore reported in the June quarter.
The consolidated revenue is expected to decline more than 12 percent on a 45 percent fall in standalone volume YoY, but the JLR volume could be flat or see moderate increase YoY. The standalone business is impacted due to the slump in commercial vehicle industry.
"Q2FY20 is expected to be a challenging one for Tata Motors as tough business conditions prevailed in all key geographies and market segments. The company is seen reporting 13 percent decline in net sales on the back of 45 percent drop in standalone volumes to 1.05 lakh units, flat YoY JLR volumes at 1.3 lakh units and unfavourable currency movement," ICICI Direct said.
Motilal Oswal expects consolidated revenues to decline 12.3 percent YoY, resulting in net loss of around Rs 1,480 crore in Q2FY20. It sees JLR's (including JV) volume increasing by 3.2 percent YoY, and 14 percent QoQ, backed by performance in China.
At the operating level, earnings before interest, tax, depreciation and amortisation (EBTIDA) may see double digit decline YoY with sharp contraction in margin, but the sequential performance is expected to be improved on JLR support and cost saving measures.
Motilal Oswal and Prabhudas Lilladher expect more than 30 percent decline in EBITDA YoY but see it increasing around 50 percent sequentially.
The key things to watch out for include current demand trends for JLR and outlook for key markets, update on cost-cutting initiatives at JLR, demand trend in domestic markets and the new product launch and impact of forex hedge loss.
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