Tata Motors Q2 Results: Loss Widens, Revenue Dips 18% As JLR Woes Offset Sales Gain
A Tata Motors Ltd. Nexon sports utility vehicle (SUV) sits on display at the Auto Expo 2020 in Noida, Uttar Pradesh, India. (Photographer: Prashanth Vishwanathan/Bloomberg)

Tata Motors Q2 Results: Loss Widens, Revenue Dips 18% As JLR Woes Offset Sales Gain

Tata Motors Ltd. reported net loss for the third straight quarter as the homegrown automaker’s luxury arm continued to face pressure, rising costs, and a slowdown in the commercial vehicles business offset an increase in domestic sales.

The company’s net loss stood at Rs 314 crore in the quarter ended September compared with a loss of Rs 217 crore a year ago, according to an exchange filing. Analysts’ estimates compiled by Bloomberg had pegged the loss at Rs 1,970 crore.

The company has now reported a loss in eight of the last 10 quarters.

  • Revenue fell 18% year-on-year to Rs 53,530 crore, compared with the Rs 48,294-crore estimate.
  • Earnings before interest, tax, depreciation and amortisation, a measure of operating profitability, dropped 20.51% to Rs 5,691 crore.
  • Margin narrowed to 10.6% from 10.9% a year ago.

This comes even as India, fighting the worst economic downturn in decades, restarted most activities after months of complete lockdown to contain the Covid-19 outbreak. Automakers—grappling with the worst slowdown in more than two decades even before the pandemic—were forced to stall operations, leading to a washout in the initial months of the shutdown. Sales slightly improved after the nation eased stay-at-home restrictions, prompting companies to push stock to dealers ahead of the festive season.

Automakers in the country are now looking at multiple ways to boost demand but financing remains a concern, indicating a complete recovery of the industry is still time away.

Tata Motors, the first major automaker to report financials, saw its domestic sales rise 13% year-on-year to 1,06,888 units in the second quarter.

Tata Motors’ luxury car unit Jaguar Land Rover, which has been suffering losses on account of declining sales, saw its woes accelerate because of the pandemic. JLR was grappling with uncertainty surrounding Brexit, stricter emission rules in Europe and a fall in exports to China—one of its fastest-growing markets. While its total retail sales rose more than 50% over the preceding quarter to 1,13,569 vehicles in the three months ended September, they are down 11.9% over the year-ago period.

The Tata Group has been working on a strategic deleveraging plan for the Indian and the luxury unit to lower debt, improve portfolio and turn cash positive in the next two years. It has also cut jobs and cancelled or deferred investments at domestic business and JLR due to a collapse in demand amid the pandemic.

Bloomberg earlier this month reported that JLR is raising cash via bond offerings. Tata Motors, too, has been working to right-size its costs and cut down capex as it aims to turn a near-zero net debt company in three years. The Indian automaker is trying to hive off its passenger and electric vehicle businesses into a separate subsidiary, and is engaged in talks with several original equipment manufacturers.

On Tuesday, shares of Tata Motors rose 2.95% to Rs 136.65 apiece on the NSE while the benchmark Nifty 50 ended the day 1.03% higher at 11,889.40 points. The quarterly results were declared after market hours.

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