Economy

Tata Motors stocks plunge most in 26 years after Q3 results

Tata Motors stocks plunge most in 26 years after Q3 results”

Tata Motors took a non-cash charge of 278.38 billion rupees for an impairment at JLR in the quarter.

The significant loss includes a one-off £3.1 billion ($A5.7 billion) exceptional charge resulting from the British auto maker deciding to adjust the value of its capitalized investments.

In the corresponding quarter a year ago, the company posted a net profit of Rs 1,215 crore.

The impairment charges have been arrived at after taking into consideration the current assets on JLR's books, future investment, and "stress testing" it for low growth environment, coming particularly out of China, rising interest rates, and technological disruptions, he added. With the risks emerging from Brexit looming large, the outlook is rather bleak for Tata Motors. "It reduces growth in depreciation and amortisation by 300 million euros per annum", Tata Motors said in a release.

".Overall performance continued to be impacted by challenging market conditions in China". The company has taken decisive steps to step up competitiveness, reduce costs and improve cash flows, while continuing to invest in exciting products and leading edge technologies. Ebitda margin slipped by 370 basis points to 0.1 per cent. The parents net loss compared with a profit of Rs 12 billion a year earlier, and also missed the average analyst estimate that called for a profit.

Guenter Butschek, CEO and MD, Tata Motors, said "Fiscal year 2019 so far has been a challenging period for the industry".

Dr Speth added: "This is a hard time for the industry, but we remain focused on ensuring sustainable and profitable growth, and making targeted investments, that will secure our business in the future".

During the quarter, JLR's retail sales were down 6.4 per cent to 144,602 units.

The firm said "significant market, technological and regulatory headwinds" were affecting the sector, while investment in new models and changing technology was still high.

The result is the company's worst quarterly loss, driven in part by a £3.1 billion ($5.7 billion) write-down on the value of its investments.

While Tata Motors has announced plans to turn around JLR, the slide in the unit's sales has continue for now.

Tata Motors shares ended 18% lower at ₹150 on NSE.

Fresh from announcing a factory shutdown as a result of Brexit, Jaguar Land Rover could also now have its credit rating downgraded as a outcome of Britain's impending exit from the European Union.



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