Tata Motors share price hits a 52-week low, as its woes widen

• Tata Motors’ stock fell by over 10%, touching a 52 week low for the company.
  
• It had posted a massive loss of ₹36.8 billion in the first quarter of the current financial year.
  
• The losses for the quarter doubled as compared to ₹18.6 billion in the same quarter of last year.
  
  

Tata Motors is in deeper trouble than its Indian auto counterparts. It is saddling the pain of Indian auto slowdown as well global slowdown, thanks to its subsidiary Jaguar Land Rover.

In today’s trade, its stock fell by over 10%, touching a 52-week low. It was trading 9.25% lower in the day’s trade at ₹112 on NSE, before hitting its low of ₹109.50.

As the auto industry in India sees its biggest slowdown spilling over to 10 months now, the woes only seem to pile on for auto giant. The company had also cut production to align with the low demand in the Indian market.

Losses mount

Tata Motors posted a massive loss of ₹36.8 billion in the first quarter of the current financial year. The losses for the quarter doubled as compared to ₹18.6 billion in the same quarter of last year.

Its UK-owned subsidiary Jaguar Land Rover too saw its net revenue stand at ₹50.74 billion, 2.8% lower than it was last year.

Dropping sales

Jaguar Land Rover’s global sales continued to decline in May with the company reporting a 12% dip in May 2019. In June 2019, its sales dropped by 9.6% year-on-year, meanwhile Tata Motors reported a 14% decline in India sales, while a 5% drop was seen in global sales.

In July, Tata Motors announced a 34% dip in its total domestic sales compared to 50,100 units sold over last year as subdued demand continued in July 2019.


“The slowing economy, excess capacity created on account of increased axle load norms, slowdown in execution of infrastructure projects over the past few quarters, drop in discretionary consumption, and poor liquidity conditions in tight financing environment have led to severe contraction in total industry volumes across segments,” the company had then said in a statement.

Downgraded by rating agencies

Global rating agencies Fitch Ratings and Moody’s both had downgraded Tata Motors with a negative outlook earlier in June.

Global ratings agency Moody’s too believes that Jaguar Land Rover will probably default on its loans.

"The downgrade reflects Moody's expectation that leverage will remain elevated and free cash flow negative for fiscal years 2020 and 2021 as Jaguar Land Rover seeks to turn around performance in China, executes its restructuring programme and continues to invest in its future model line-up including electrification," said Tobias Wagner, Vice-President and Senior Analyst at Moody's.

Brexit, US-China trade war and signs of a slowdown in the global economy could be the reasons for the losses incurred by JLR. China, which has traditionally been one of the biggest markets for the luxury car.