Tata Motors (NYSE: TTM) is set to release its 3rd quarter results (ended December 2018) for Fiscal Year 2019 on February 7, 2019 early morning. The company has seen a mixed first half of the year as sales in JLR had slowed a bit because of the market volatility, though the sales of its domestic brand Tata Motors Limited have picked up substantially. The EBIT margins are a bit lower due to the headwinds and volatility in the global market. The market expects the company to post $43.79 billion in revenue and $0.24 in earnings respectively for the quarter 3.
We have a $19 price estimate for the company, which is higher than the current market price. View our interactive dashboard – Our Outlook For Tata Motors In FY19 – and modify the key assumptions/forecasts to arrive at a price estimate of your own.
Sales of Tata Motors limited in the first half of the year recorded a 25% growth in sales volume in its domestic market. The company’s domestic business is expected to continue delivering strong improvement in operational and financial performance by implementing the Turnaround 2.0 strategy effectively. The company has managed to increase its market share while delivering robust improvement in profitability in both the commercial vehicle and passenger vehicles, thus in turn, generating positive free cash flows. Further, the company expects to increase its market share in the face of an intensely competitive market. The company is well positioned to capture market trends and is looking forward to better profitability returns in the commercial and passenger vehicle segment.
On the other hand, JLR has suffered in volumes and margins over the first half of the Fiscal year 2019. China has been dragging down the volume due to the challenging market conditions in the country. Adding further to the woe, the import duty charges and the newly implemented US-China tariffs have pulled down the profits further in the red zone. Consequently, the company had posted negative margins for JLR in the 2nd quarter and launched a comprehensive turnaround plan to improve free cash flows and thus profitability. The plan seems to be striking the break-even point by March 2019. JLR’s domestic sales were further falling off by the diesel taxation and regulations, coupled with the uncertainty related to Brexit.
The company continues to invest in newer technologies as seen in recently launched Jaguar I-PACE and E-PACE. The company has set a target to deliver cost and cash outflow improvements of $2.85 billion over the next 6 quarters. Investment spending came in at $1.14 billion for the previous quarter.
We expect the company to post decent results on the back of its domestic brand for the quarter 3, while JLR is expected to be affected due to the market and political volatility.
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