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Tata Motors is worth nothing without JLR after Covid disruption, brokerage CLSA says

JLR is only driver of valuation. Future equity infusions are likely to be used for loss funding & so we don’t attribute any equity value to India business, CLSA says.

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Mumbai: With the coronavirus pandemic crippling demand for automobiles worldwide, Tata Motors Ltd. is worth nothing without its luxury unit Jaguar Land Rover, according to CLSA Ltd.

The $3.7 billion Indian auto company faces a significant increase in debt due to the crisis, and its plan to deleverage may be delayed by four to six quarters, CLSA said. It has already received a lifeline from parent Tata Sons Pvt Ltd. in the form of a preferential equity allotment, and the brokerage thinks further aid could be required.

“JLR is the only driver of its valuation,” analyst Amyn Pirani wrote in a report, downgrading Tata Motors to underperform from buy. “We believe future equity infusions are also likely to be utilized for loss funding and hence we do not attribute any equity value to its India business.”

Indian demand for passenger vehicles was slumping even before the virus outbreak. With the pandemic forcing a strict lockdown, the nation’s top carmakers couldn’t ship a single vehicle to dealers in April. Tata Motors has been the worst performer on the S&P BSE Auto Index this year with a decline of over 53%.

The virus has also been a setback for Jaguar Land Rover, which was beginning to show signs of a turnaround late last year from the combined negative impact of a slowdown in China, Brexit and European emissions rules. Tata Sons had been looking for a strategic partner for the business but pledged it wouldn’t sell JLR.

CLSA says the global luxury unit and Indian commercial vehicle business should both recover next fiscal year. While a sale of the India passenger vehicle business and its financing arm could increase Tata Motors’ equity value by 92 billion rupees ($1.2 billion), they are “low probability events” in the current environment, Pirani said.-Bloomberg

Also read: With 70% skilled labour gone, Chhattisgarh industries will struggle to resume work


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  1. JLR had more reputation than book value always, typical british, my friend came from Ford USA to dismantle the engineering dept from Coventry tu Detroit in 1990, and threw a Dine & wine party at Hiltom´s food & drinks strictly only Spanish as he knew I would love to enjoy., my wife & me were hony guests of the host, he said, Ray we made a big mistake buying Jaguar. Pietchetsrieter conned BMW to buy Rover , another flop. Cars , he was shown the door by Quandt family. only German, and Toyota rest are waste of time.

    • Only 200% mechanic knows a car, Tata is no car mechanik , he is only Tata, he fell for Jag and that is all, Money will never be recovered. Ces´t fini.

  2. Don’t know how a 150 years old group with a massive customer base in commercial & passenger vehicles is said to be of no value,. How can one be so stupid to put this article cause JLR WAS reduced to bankruptcy when Tata took over, please use common sense, Mr. Acharya & Mr Pirani. Paid news sometimes show the foolish behaviour or mindset of the people involved

    • Entire auto sector is in Indua turmoil & pinpointing Tata Motors alone is not giving the true picture .

      • You have not seen the headline, It is centred on Tata, Another shot of whisky perhaps ?

    • Massive customer base, is not quantified in the books in numbers . Brits buy what they can afford, some stretch and buy for appearance. with bank credit.In the subcontinent some buy w/o knowing the inside story which is black like carbon.

    • Sounds familiar. I have always heard similar arguments before. Thomas cook was a 100 year old company. 😂

  3. Don’t under estimate TATA. if Indians decide to support TATA, Mahindra, other companies will have to shutdown. I don’t understand what pleasure The print gets in demeaning India and Indian companies.

    • regret to say you are simply biased which is not an economic term. The market value is above sentiments. Cheers. If Indians… if the world was flat ?

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