Tata Motors share price rises over 8% on recovery in China sales

Tata Motors share price rose in trade today after the Indian auto major reported a recovery in August retail sales for China market. Tata Motors share price rose up to 8.2% intra day to Rs 131.90 compared to the previous close of Rs 121.90 on BSE. Tata Motors stock opened 2.13% higher at Rs 124.50 on BSE.  The large cap share has fallen 24% since the beginning of this year and lost 50.9% during last one year. The stock hit its 52-week high of Rs 282 on September 10, 2018 and 52-week low of Rs 106 on September 4, 2019.

Retail sales in China continued to recover (up 17.4% year-on-year) as the company's local turnaround plan gathered momentum. Demand for the all-new Range Rover Evoque continued to strengthen (up 50.9% year-on-year) with sales just beginning in China, and sales of the Range Rover Sport increased by 6.4%.

However, Tata Motors global wholesales in August 2019, including Jaguar Land Rover, stood at 72,464, lower by 32%, over August 2018. Global wholesales of all Tata Motors' commercial vehicles and Tata Daewoo range in August 2019 were at 25,366 nos., lower by 45%, over August 2018. On August 14 this year, Crisil lowered its long-term rating amid weakening risk profile of its UK arm Jaguar land Rover.  CRISIL in its release said it has downgraded rating on the long-term bank facilities of Tata Motors (TML) to 'AA-/Negative' from 'AA/Negative', but reaffirmed rating on short term bank facility, commercial paper and short-term debt at 'A1+'.

"Continued weak sales volumes and profitability, coupled with sizeable necessary capex continues to constrain the outlook for free cash flows. Moreover, continued uncertainty around the terms on which Brexit is concluded continues to pose risks to JLR's business profile. An adverse outcome on Brexit for JLR may result in significant disruptions to its supply chain, and elongate its working capital cycle," it said.

On July 25 this year, Tata Motors reported a consolidated net loss of Rs 3,679.66 crore for the first quarter ended June 30, 2019, dented by muted volume growth in domestic business as well as in its British arm Jaguar Land Rover (JLR). The company had posted a consolidated net loss of Rs 1,862.57 crore in the June quarter of 2018. The Profit was impacted by demand slowdown, higher axle loads, liquidity stress, low freight availability for cargo operators.

On May 20, 2019, Tata Motors reported a 49 per cent fall in its consolidated net profit to Rs 1,108.66 crore for the fourth quarter ended March 31. The company had posted a consolidated net profit of Rs 2,175.16 crore in the same period previous fiscal.

Meanwhile, Sensex and Nifty were trading higher in afternoon trade. While Sensex gained 165 points to 37,306, Nifty rose 34 points to 11,037.

Edited by Aseem Thapliyal