Can Tata Motors Stock Price Recover as Q1FY19 Results Disappoints?

Tata Motors stock price hogged the limelight when it tumbled by 6% as opposed to its prediction. The company reported a consolidated net loss of Rs 1864 crore for the June quarter and its revenue dipped from Rs 65,956.78 crore to Rs 58,766.07 crore in the last year.

Well, if that was not enough, the reports suggested that it was the worst quarterly loss made by the company in the last 9 years. Here, in this article, we have mentioned the reasons that dragged Tata Motors into the negative territory.

Global Headwinds faced by Jaguar Land Rover (JLR)

India’s largest automaker failed to keep upto the expectations of the customers because of its poor show made by its UK based flagship brand Jaguar Land Rover. The company reported a loss of 210 million pounds because it was not able to sell its products in China (the major market) due to the changes in the import duties, and Europe, thanks to its anti-diesel campaign.  All these factors resulted in a 7% fall of JLR quarterly revenues.

Interestingly, in India, the company posted the best performance in the last 5 years as the demand for trucks and passenger vehicles fueled its margins and revenues.

Legal Notice

Another reason why the shares of Tata Motors bumped down on the Dalal Street was due to the legal notice issued by the government of India for not scrapping the first bulk order of electrical vehicles as promised in the contract. The move came after the carmaker delivered 5000 cars and it didn’t meet the expectations.

Losses in TATA Motors Thailand Plant

Recently, Tata Motors revealed that its Thailand based manufacturing plants aren’t able to generate the expected profits; hence they are planning to shut down the same. Though the company will continue to operate in the market, with revamped products that are suitable for the local needs through a completely built unit distribution model, but will cease its manufacturing operations! The company had incurred a net loss of 170 crore in its business in the last year.

We continue to grow in the domestic market, with a 21% increase in sales volumes in July 2018 as compared to last year. #ConnectingAspirations
Know more: https://t.co/UPLch5IvSZ pic.twitter.com/TMVzQNgsh8

— Tata Motors (@TataMotors) August 1, 2018

Well, though the company has suffered from a setback, but it is believed that all these are temporary issues and the company will be able to deliver as per the planned margins outlined earlier this year. The newly launched SUV Tata Harrier further makes us believe in their capabilities. The car is built on the similar platform like Range Rover Evoque and will deliver best in class power, performance, features and space. This car will definitely create a strong impact on the global market.

Another strong point of Tata Motors is though the wholesale volume if JLR has declined, but the retail requirements are stronger and hence we can expect a bounce back. In China, the demand for Range Rover Sport already exceeds its bookings; hence we are confident that the rest of the picture would improve in the rest of the year.