Tata Motors gains 4% after UK, EU agree historic Brexit trade deal

Shares of Tata Motors rose 4 per cent to Rs 183.50 on the BSE on Monday after the United Kingdom (UK) and the European Union negotiators finalized their historic post-Brexit trade agreement.

The European Union so far has been a ‘single market,’ for the Tata Motors-owned Jaguar Land Rover (JLR) but this is set to change after the UK’s exit from the European Union.

Meanwhile, in the past two trading days, the stock of Tata Motors had climbed 8.5 per cent after the company maintained profitability guidance for its luxury car maker JLR. Jaguar Land Rover has not seen any impact so far from issues at UK ports, its parent Tata Motors said on Thursday, even as many countries cut transport ties with Britain due to a fast-spreading new variant of the coronavirus.

"Jaguar Land Rover has comprehensive contingency planning and actions in place to respond to ongoing COVID challenges and disruption. This is subject to constant review," Tata Motors said in a media statement.

Recent issues at UK ports have had no immediate impact for Jaguar Land Rover. Our guidance of improved growth, profitability and cash flows in second half of the year continues to hold, it said.

“Tata Motors has turned FCF positive in 2Q (Rs 67 bn), driven by improved working capital management - the inventory at JLR has corrected on improving retails. Further, the management achieved Charge+ savings of GBP 1.8bn over 1HFY21 (the company is on track of achieving its target to save GBP 2.5bn in FY21). We believe that gearing levels will improve here onwards and net-debt/equity ratio will improve from 1.6x to 1.1x over FY21-23E,” analysts at HDFC Securities said in company update.

The loss-making India PV business has turned the corner and reported a positive margin, driven by robust market share gains. This will improve domestic cash flows and make the PV business more attractive for potential partners, it said.