Tata Motors gains 5% as JLR expects earnings to improve in Q4

Shares of Tata Motors were trading 5 per cent higher at Rs 183 on the BSE in early morning trade after the company’s wholly-owned subsidiary Jaguar Land Rover (JLR) said it expects improved financial results for the quarter ended March 2019 (Q4FY19).

In comparison, the benchmark S&P BSE Sensex was up 0.62 per cent at 38,913 level at 09:39 am.

“The Company reaffirms that it expects improved financial results in the fourth quarter period to March 31, 2019, compared to the first nine months of the financial year, with significant positive cash flow in the fourth quarter,” JLR said on Friday, March 29, 2019 after market hours in a regulatory filing.

The company continues to execute its product plans and Project Charge turnaround strategy to deliver 2.5 billion pounds of cash flow improvements by March 2020, it added.

JLR issued the statement in connection with S&P's decision last week to downgrade the Company to 'B+' with credit watch negative.

S&P Global Ratings had downgraded the credit rating of Tata Motors and its wholly-owned subsidiary JLR, citing weak profitability, Tata Motors said Thursday.

Analysts at JP Morgan have ‘hold’ rating on the stock on the expectation of faster-than-expected volume growth in JLR; platform consolidation/cost reduction efforts to aid margins; faster-than-expected recovery in India commercial vehicle (CV) volumes/market share; and PV business profitability.

“JLR faces multiple challenges, such as WLTP changeover (emission norm) led supply distortions in the UK and Europe, intense competition in the European luxury car market, a slowdown in China, especially for SUVs and rising incentives for luxury cars, Dieselization, and Brexit and trade tensions. We consider the India turnaround commendable with strong growth and market share gains across both CV and passenger vehicle (PV) segments. The company’s strategic initiatives around network expansion, improved customer/ dealer engagement and plugging portfolio gaps have yielded positive results,” the brokerage firm said in a report dated March 8, 2019.