Why Tata Motors stock is the top loser on Sensex, Nifty today

The Tata Motors stock fell to a one-month low in early trade today after the automaker's British unit Jaguar Land Rover (JLR) said it would cut 500 jobs temporarily at its plant in central England. The stock was the top loser on Sensex and Nifty and fell up to 3.84% to an intra day low of 170.50 on BSE. It opened at a loss of 2.14% at 173.50 compared to the previous close of 177.30 on the BSE. The stock was trading 4.94% away from its 52 week low of 164.55 level on the BSE. On Nifty, the stock was trading 2.45% lower at 172.90 on the BSE.

Also read: Tata Motors posts Rs 1049 crore loss in Q2 as JLR continues to flounder

The stock closed 3.02% lower at 171.95 on the BSE. On Nifty, the stock closed 2.88% lower at 172.15. 

The stock has lost 57.22% during the last one year and fallen 59.75% since the beginning of this year. The large cap stock is trading below its 50-day and 200-day moving average of 180.83 and 247.30.

Britain's biggest carmaker JLR said "external environment remains challenging"; company is taking decisive actions to achieve necessary operational efficiencies to safeguard long-term success.

Jaguar Land Rover has been facing headwinds for long in terms of low sales, poor earnings performance and ratings downgrade.

The slowdown in China, falling sale of diesel vehicles in Europe and concerns on Brexit has hammered the luxury car-makers' profitability, and consequently that of Tata Motors (JLR accounts for 80 per cent of its revenues).

In the first half of this fiscal, JLR reported a net loss of 311 million pounds. It posted its second straight quarterly loss at Rs 1,049 crore for the quarter ended September 30, 2018.

JLR suffered a 13.2 per cent decline in retail sales in the second quarter at 129,887 units that resulted in a 11 percent fall in its net revenue at 5.6 billion pound. It had a net loss of 101 million pound and a negative free cash flow of 0.6 billion pounds. This more than offset the improved performance of Tata Motors in India.

In October, Jaguar Land Rover reported a 4.6 per cent decline in total retail sales at 44,282 units in October.

Sales in China fell 49 per cent as market conditions remained challenging amid tariff changes and continued trade tensions with the US, which are impacting consumer confidence and automotive purchases, Tata Motors said.

Moody's Investors Service has changed Tata Motors' rating outlook to negative from stable, citing expectations of weak operating performance of the company's British arm Jaguar Land Rover (JLR). The ratings agency has also affirmed the 'corporate family rating' and the company's senior unsecured instruments ratings at Ba2, which is considered to be speculative grade and subject to substantial credit risk.

"The negative outlook reflects JLR's weakening credit profile and the significant challenges in accomplishing a rapid turnaround amid heightened market risks and headwinds from rising input costs and fuel prices, as well as adverse impacts from the outcome of the Brexit negotiations," Moody's said.