Not just Tata Motors, a lot of other companies are excited by Jaguar Land Rover numbers

Not just Tata Motors, a lot of other companies are excited by Jaguar Land Rover numbers
  • Tata Motors finally has a ‘BUY’ rating from CLSA after three years.
  • For the quarter ending in September, Jaguar Land Rover sold 128,953 cars, slightly down (-0.7%) compared to the same period a year ago.
  • Investors believe that the downtrend in sales may finally be coming to an end.
  • The expected stability in JLR sales has given hope to many ancillary companies like tyres, batteries and other auto parts makers.
Months of despair have given way to some good news from Tata Motors. It’s British luxury car unit Jaguar Land Rover’s sales seem to be stabilsing. At least, that’s what the street believes.

After three years of having a ‘SELL’ rating, Tata Motors has finally been upgraded to ‘BUY’ rating by global broking firm CLSA.

Tata Motors’ share price spiked over 13% after the company’s second-quarter earnings.

Between July and September 2019, Tata Motors reported a net loss of ₹216.5 crore but that was still a massive improvement from the same quarter in the previous year⁠— when the loss was nearly five times more.

For the quarter ending in September, Jaguar Land Rover retail sales nearly the same (down 0.7%) as a year earlier⁠— but the losses were less because the company had cut costs.

Jaguar Land Rover saw a 24.3% jump in its sales in China, which is a big market for the company. “JLR’s volume is showing signs of bottoming-out on a low base in China and the ramp-up of the recently upgraded Evoque model—the start of defender sales in 4QFY20 should provide a further boost,” the CLSA report said.

Earlier this year, global rating agencies Fitch Ratings and Moody’s both had downgraded Tata Motors with a negative outlook.

In June 2019, Jaguar Land Rover retail sales was down by 9.6% as compared to the same month the previous year. In May 2019 too, the company had seen a 12% decrease as compared to the same month in the previous year.

“Against challenging market headwinds, for the third consecutive month we have achieved double-digit growth in China, benefitting from our local turnaround plan and performing ahead of the broader market. We have also outperformed shrinking markets in other regions,” said Felix Brautigam, Jaguar Land Rover Chief Commercial Officer in a statement.

JLR cheer is spreading

The market excitement is visible not just with Tata Motors’ share price but that of many ancillary companies in the business.

For the auto industry which has been hit by a slowdown for a year now, the comeback of Tata Motors and JLR is a positive sign for many others.

Stocks like Bharat Forge, Motherson Sumi, and Exide, which make parts for automobiles, are also celebrating what they believe is a light at the end of the tunnel.

Motherson Sumi, the largest manufacturer of automotive wiring harnesses and mirrors for passenger cars, too saw its stock trading at a 10% jump on Tuesday afternoon.

With the festive sales, the October report of the auto industry is also expected to finally get a sigh of relief for the players. New entrants like MG Hector delivered 700 cars on Dhanteras while luxury car Mercedes Benz delivered 600 cars on the festive day.

“Passenger vehicle sales, which were in the doldrums since late last year, have shown positive sales trajectory this year in comparison to the off-take witnessed during Dhanteras 2018”, reported IANS.

"In terms of passenger vehicle sales, we have witnessed a similar off-take pattern to last year's Dhanteras day," Vinkesh Gulati, Vice President of the Federation of Automobile Dealers Associations (FADA) told IANS.