TATA MOTORS DOWN 30% | What To DO? | Is there a BUY CALL ? | KNOW HERE

WHY TATA MOTORS DOWN 30%?
Tata Motors’ December quarter loss of Rs 26,961 crore took the market by surprise. It was the highest-ever quarterly loss reported by any company on Dalal Street till date. 

The losses were largely caused by a one-time exceptional non-cash charge for asset impairment of 3.1 billion pounds at its subsidiary JLR. 

TATA MOTORS I December quarter, 2018 I Rs 26,961 cr loss 
On Thursday, Tata Motors announced a non-cash exceptional charge to cut the book value of capitalised investments. Analysts awaited clarity over the nature of assets impaired to ascertain the probability of a similar action going forward, given a huge CapEx programme of 12 billion pounds over three years. 

Tata Motors, on its part, said it had to take the accounting adjustment as part of ‘charge’ and Accelerate ‘transformation’ programmes to enable Jaguar Land Rover to counter the multiple economic, geopolitical, technological and regulatory headwinds impacting the automotive industry currently. Analysts have cut Tata Motors’ earnings estimate by up to 35 per cent post results. 

WHAT IS WRONG IN TATA MOTORS?

Shares of Tata Motors Ltd. have dropped over 56.35 per cent year-to-date as the automaker continues to face headwinds at Jaguar Land Rover—which contributes 78 per cent of its sales. Lower sales at the luxury unit led to its parent’s worst loss in nine years in the quarter ended June.

Here’s what went wrong for the company: Muted Volume Growth Sales of JLR took a hit and its volume growth slowed to low single digits in the past few months due to a combination of the following factors: 

• Uncertainty regarding diesel cars in Europe. 
• People in China deferring purchases ahead of the country’s move to cut import tariffs on cars. 
• Heavy discounting in the company’s current inventory in China.

JLR Volume Growth

Forex Losses Weigh 

Volatility in the U.S. dollar against the pound sterling—and the subsequent forex losses—has adversely impacted JLR’s profitability.

Ongoing investments, capital expenditure and product development costs have risen significantly over the past few quarters, which has led to a corresponding increase in JLR’s net debt and negative cash flows. The automaker plans to spend nearly £4.5 billion on a full-year basis, which could further increase cash-burn and debt levels.

JLR's Free-Cash Flow And Working Capital

The Analyst Who Got It Right Despite its stock slide, analysts have retained faith in India’s largest truckmaker. Nearly 75 per cent of the analysts tracking Tata Motors has a ‘Buy’ rating on its stock with an average target price of 385, according to data compiled by Bloomberg. That implies an upside of nearly 50 per cent. Nitij Mangal, an auto analyst at CLSA, has a contrarian view, which has also been the most accurate. Mangal had downgraded the Tata Motors scrip to “sell” in February 2017 when it was trading above Rs 500. The stock closed 0.36 per cent higher at Rs 265.05 on Wednesday.

CLSA maintains its rating. It has revised its target price to Rs 250—one of the lowest—after the automaker announced its results for the June ended quarter. The brokerage said Tata Motors’ earnings and sales will be adversely impacted due to an overall weak outlook. It attributes it to subdued demand in the West, uncertainty over diesel vehicles, an ageing portfolio and rising competition in the SUV segment.

“JLR is now vulnerable to any sharp cyclical slowdown in demand as well as geopolitical risks from the U.S. import tariffs and Brexit," said Mangal in a recent report on Tata Motors.

About Tata Motors:

Tata Motors Limited (formerly TELCO, short for Tata Engineering and Locomotive Company) is an Indian multinational automotive manufacturing company headquartered in Mumbai. It is a subsidiary of Tata Group, an Indian conglomerate. Its products include passenger cars, trucks, vans, coaches, buses, sports cars, construction equipment and military vehicles.

Tata Motors has auto manufacturing and assembly plants in Jamshedpur, Pantnagar, Lucknow, Sanand, Dharwad, and Pune in India, as well as in Argentina, South Africa, Great Britain and Thailand. It has research and development centres in Pune, Jamshedpur, Lucknow, and Dharwad, India and in South Korea, Great Britain and Spain. Tata Motors' principal subsidiaries purchased the English premium car maker Jaguar Land Rover (the maker of Jaguar and Land Rover cars) and the South Korean commercial vehicle manufacturer Tata Daewoo. Tata Motors has a bus-manufacturing joint venture with Marcopolo S.A. (Tata Marcopolo), a construction-equipment manufacturing joint venture with Hitachi (Tata Hitachi Construction Machinery), and a joint venture with Fiat Chrysler which manufactures automotive components and Fiat Chrysler and Tata branded vehicles.

Founded in 1945 as a manufacturer of locomotives, the company manufactured its first commercial vehicle in 1954 in a collaboration with Daimler-Benz AG, which ended in 1969. Tata Motors entered the passenger vehicle market in 1988 with the launch of the TataMobile followed by the Tata Sierra in 1991, becoming the first Indian manufacturer to achieve the capability of developing a competitive indigenous automobile. In 1998, Tata launched the first fully indigenous Indian passenger car, the Indica, and in 2008 launched the Tata Nano, the world's cheapest car. Tata Motors acquired the South Korean truck manufacturer Daewoo Commercial Vehicles Company in 2004 and purchased Jaguar Land Rover from Ford in 2008.

Tata Motors is listed on the (BSE) Bombay Stock Exchange, where it is a constituent of the BSE SENSEX index, the National Stock Exchange of India, and the New York Stock Exchange. The company is ranked 226th on the Fortune Global 500 list of the world's biggest corporations as of 2016.

On 17 January 2017, Natarajan Chandrasekaran was appointed the chairman of the company Tata Group.

Electric vehicles

Tata Motors has unveiled electric versions of the Tata Indica passenger car powered by TM4 electric motors and inverters, as well as the Tata Ace commercial vehicle, both of which run on lithium batteries.

Tata Motors' UK subsidiary, Tata Motors European Technical Centre, has bought a 50.3% holding in electric vehicle technology firm Miljøbil Grenland/Innovasjon of Norway for US$1.93 million and plans to launch the electric Indica hatchback in Europe next year. In September 2010, Tata Motors presented four CNG–Electric Hybrid low-floored Starbuses to the Delhi Transport Corporation, to be used during the Commonwealth Games. These were the first environmentally friendly buses to be used for public transportation in India.

History of TATA MOTORS

Tata Group entered the commercial vehicle sector in 1954 after forming a joint venture with Daimler-Benz of Germany. After years of dominating the commercial vehicle market in India, Tata Motors entered the passenger vehicle market in 1991 by launching the Tata Sierra, a sports utility vehicle based on the Tata Mobile platform. Tata subsequently launched the Tata Estate(1992; a station wagon design based on the earlier Tata Mobile), the Tata Sumo (1994, a 5-door SUV) and the Tata Safari(1998).

Tata launched the Indica in 1998, the first fully indigenous Indian passenger car. Although initially criticized by auto analysts, its excellent fuel economy, powerful engine, and an aggressive marketing strategy made it one of the best-selling cars in the history of the Indian automobile industries. A newer version of the car, named Indica V2, was a major improvement over the previous version and quickly became a mass favourite. Tata Motors also successfully exported large numbers of the car to South Africa. The success of the Indica played a key role in the growth of Tata Motors.In 2004, Tata Motors acquired Daewoo's South Korea-based truck manufacturing unit, Daewoo Commercial Vehicles Company, later renamed Tata Daewoo.

On 27 September 2004, Tata Motors rang the opening bell at the New York Stock Exchange to mark the listing of Tata Motors

In 2005, Tata Motors acquired a 21% controlling stake in the Spanish bus and coach manufacturer Hispano Carrocera. Tata Motors continued its market area expansion through the introduction of new products such as buses (Starbus and Globus, jointly developed with subsidiary Hispano Carrocera) and trucks (Novus, jointly developed with subsidiary Tata Daewoo).

In 2006, Tata formed a joint venture with the Brazil-based Marcopolo, Tata Marcopolo Bus, to manufacture fully built buses and coaches

In 2008, Tata Motors acquired the English car maker Jaguar Land Rover, a manufacturer of the Jaguar and Land Rover from Ford Motor Company

In May 2009, Tata unveiled the Tata World Truck range jointly developed with Tata Daewoo; the range went on sale in South Korea, South Africa, the SAARC countries, and the Middle East at the end of 2009.

Tata acquired full ownership of Hispano Carrocera in 2009.

In 2009, its Lucknow plant was awarded the "Best of All" Rajiv Gandhi National Quality Award.

In 2010, Tata Motors acquired an 80% stake in the Italian design and engineering company Trilix for €1.85 million. The acquisition formed part of the company's plan to enhance its styling and design capabilities.

In 2012, Tata Motors announced it would invest around ₹6 billion in the development of Futuristic Infantry Combat Vehicles in collaboration with DRDO.

In 2013, Tata Motors announced it will sell in India, the first vehicle in the world to run on compressed air (engines designed by the French company MDI) and dubbed "Mini CAT".

In 2014, Tata Motors introduced first Truck Racing championship in India "T1 Prima Truck Racing Championship".

On 26 January 2014, the Managing Director Karl Slym was found dead. He fell from the 22nd floor to the fourth floor of the Shangri-La Hotel in Bangkok, where he was to attend a meeting of Tata Motors Thailand.

On 2 November 2015, Tata Motors announced Lionel Messi as global brand ambassador at New Delhi, to promote and endorse passenger vehicles globally.

On 27 December 2016, Tata Motors announced the Bollywood actor Akshay Kumar as brand ambassador for its commercial vehicles range.

On 8 March 2017, Tata Motors announced that it has signed a memorandum of understanding with Volkswagen to develop vehicles for India's domestic market.

On 3 May 2018, Tata Motors announced that it sold its aerospace and defence business to another Tata Group Entity, Tata Advanced Systems, to unlock their full potential.