Tata Motors stock update!
Last updated: 12 Jan, 2021 | 10:27 am
Tata Motors share price gained more than 12% this morning on the back of favourable developments in JLR and speculation around collaboration with Tesla. Here are a few highlights:
JLR sales recover
- Tata Motors’ wholly-owned subsidiary JLR has posted a recovery in sales in the Oct-Dec 20 period. JLR Q3 retail sales came at 1,28,000 units (down 9 percent YoY, but up 13.1% QoQ) in line with CLSA’s estimates.
- The Jaguar brand declined 21% YoY in Q3 while Land Rover performed better, down just 5% YoY.
- JLR had said that it has since seen a 53% on-quarter rise in sales in the quarter ended September 30, 2020, followed by the 13.1 per cent increase in the most recent quarter, indicating recovery.
Free Cash Flows to improve, help in deleveraging
- CLSA believes that JLR recovery should drive strong Free Cash Flow generation and deleveraging for the company. It continues to forecast a sequential volume recovery for JLR.
- The research firm forecasts Commercial Vehicle sales to rise 8 percent and Passenger Vehicles sales to grow at 28% for FY20-23. The auto net debt should decline from ₹48,700 crore in FY20 to Rs 33,300 crore by FY23, according to its estimates.
Speculation about Tesla
- There is rumour going around the market that Tesla has been searching for an Indian manufacturing partner and settled on Tata Motors, as it has the best EV infrastructure in the industry in the country. Tata's Nexon EV is India's best-selling electric vehicle.
- However, Tata Motors has denied any association with Tesla and said that it is yet to finalise a partner for its passenger vehicle business.
Despite concerns around the risk of a second wave of infections in many countries and other geopolitical risks, Tata Motors’ management expects a gradual recovery of demand and supply in the coming months. The management also said that they are committed to achieving near-zero net automotive debt in the coming years.