#Tata Motors Ltd. Profit And Loss

[noragaur]

Analyzing Tata Motors Share Price: Trends, Insights, and Future Projections

Uncover the fluctuations, patterns, and driving factors behind Tata Motors' share price. Gain valuable insights into the company's stock performance, market dynamics, and expert projections for potential investors and enthusiasts.

[optionperks]

Sensex Falls Below 74,000, Nifty Under 22,500 As IT Stocks Drag: Midday Market Update

India's benchmark indices declined through midday on Tuesday on likely profit booking after hitting a fresh record high in the previous session. Mixed global cues and worries of a delay in rate cuts by the Fed pulled IT stocks lower, led by Infosys Ltd. and Tata Consultancy Services Ltd. As of 12:15 p.m., the NSE Nifty 50 was trading 40.05 points, or 0.18%, lower at 22,421.95, and the S&P BSE Sensex fell 172.22 points, or 0.23%, to trade at 73,842.33. The Nifty fell 0.33% to hit an intraday low of 22,388.15, and the Sensex declined 0.36% to touch a low of 73,746.22 so far in the day. "The short-term market trend is still positive. Our view is that the broader market structure is bullish, but a fresh uptrend rally is possible only after the rejection of 22,550/74,250," said Shrikant Chouhan, head of equity research at Kotak Securities. Traders can take a contra trade around 22,325/22,300 with a stop loss of 22,200 levels, Chouhan said. HDFC Bank Ltd., Bajaj Auto Ltd., Tata Motors Ltd., Adani Ports and Special Economic Zones Ltd., and Mahindra & Mahindra Ltd. were contributing to the Nifty. Infosys Ltd., Tata Consultancy Services Ltd., Reliance Industries Ltd., Larsen & Toubro Ltd., and ICICI Bank Ltd. were weighing on the index. On NSE, nine sectoral indices were trading higher, while three declined. The NSE Nifty Realty rose the most, while the NSE Nifty IT fell the most among sectoral indices. Broader markets outperformed benchmark indices with the S&P BSE Midcap rising 0.83% and the S&P BSE Smallcap gaining 1.02% through midday on Tuesday. On BSE, 16 sectors advanced, while four declined. The S&P BSE Consumer Durables rose the most among sectoral indices, while the S&P BSE TECK index fell the most. Market breadth was skewed in favour of buyers. Around 2,633 stocks rose, 1,019 stocks fell, and 121 stocks remained unchanged on BSE. www.optionperks.com

[blogthetortoise-blog]

NRB Bearings Ltd - Rolling out growth

NRB Bearings (NRB) was the first company to manufacture needle roller bearings in India. For over 40 years, NRB has been the pioneer and leader in the bearing technology space. It is a recognized leader and the largest manufacturer of needle roller bearings in India, with ~70% segmental market share. With 65% revenue coming in from domestic OEMs, NRB is expected to be a key beneficiary of robust growth in the automobile sector. We are especially positive about the 2 wheeler segment (30% revenue contribution) in view of improving rural economic conditions. It has two government accredited R&D centers that focus on quality engineering and disruptive technologies that will drive future growth. NRB’s product range covers over 5,500 different types of parts of primarily customized friction solutions. It is one of the three largest suppliers of customized bearings, and crank pins to the two and three-wheeler industry. NRB Group has a market share of ~70% in the needle roller bearings segment, and a strong market position in the cylindrical roller bearings segment. The Company is a leader in needle roller bearings, conventional cylindrical roller bearings, and has developed a new generation of lightweight drawn cup bearings. NRB has a diversified revenue stream with no customer contributing to more than~10% of revenues for the Company. The top 10 clients contribute ~50% of the top-line. With a proven track record of over 50 years, it is the preferred supplier for leading domestic OEMs such as Hero MotoCorp, Bajaj Auto, Maruti Suzuki, Tata Motors and Ashok Leyland, among others. NRB will be a key beneficiary of the strong volume growth witnessed in the automobile segment across sectors, with OEMs accounting for ~65% of revenues. Exports are also growing at a robust pace, led by a recovery in the North-American and European truck/PV markets (~20% of revenue). Increasing traction in the after-market segment and incremental revenue from the defence, aerospace and railway segments, coupled with a fall in interest cost, would aid in topline growth and margin expansion. In the CV segment, it now supplies 100% of needle and cylindrical bearing requirements to Eicher Motors & Volvo. Among tractors, apart from supplying entrenched players such as Mahindra and TAFE, NRB is also the sole supplier of needle and cylindrical bearings to high-growth newer companies, who are swiftly gaining market share, like Sonalika and John Deere. In passenger cars, the company is the most crucial supplier of custom-designed bearings for India’s largest players, especially in transmission bearings. NRB’s foray into defense has commenced successfully, with its products being accepted at DRDO and NAL. NRB has three subsidiaries viz. SNL Bearings Ltd, NRB Bearings (Thailand) Ltd and NRB Bearings Europe GmbH. SNL Bearings Ltd (SNL), in which NRB holds 73.45% equity, reported PAT of Rs 6.6 cr in FY17. Despite the challenging environment in the Indian economy post demonetization and implementation of new BIS-IV emission norms, SNL achieved a sales growth of 11.5% from increased sales volumes from existing and new OEM customers. SNL expects to further capitalize on growth opportunities during the current year, and enhance profitability with an emphasis on improving quality and productivity. NRB Bearings (Thailand) Ltd (NRBT), a wholly-owned subsidiary, increased its sales by 18% to Rs 29.9 cr in FY17. The company has made a maiden profit for the year at Rs 85 lks, mainly owing to higher manufacturing volumes and lower exchange losses. NRB Bearings Europe GmbH, a wholly-owned subsidiary, was set up to support an increase in exports to Europe. Greaves Cotton Ltd – Re-aligning growth strategies KNR Construction Ltd- Building Highways Sabyasachi Paul has been associated with equity research and advisory on equity markets in India for over 9 years & currently heads the equity research desk of Eastern Financiers Ltd, Kolkata. He also manages a portfolio on the online platform Kristal. Find link to the strategy named ‘The Tortoise’   Read the full article

[1stnewslink]

sensex today: Stock Market LIVE Updates: Retail investors make beeline for Zomato IPO. IT stocks in high demand. Profit booking in realty stocks. Mindtree jumps 8%. Wipro 4%

Domestic stock benchmarks started Wednesday’s session on a flat note amid selling pressure in private bank stocks. Tech Mahindra was the top Nifty50 early deal winner, up 0.70 percent. L&T, Adani Ports, Wipro, and HCL Tech were among the other blue-chip top performers. On the other hand, ICICI Bank was the biggest straggler, down 0.65 percent. Other losers include UltraTech Cement, HDFC Bank, Axis Bank and Eicher Motor. Just Dial gained 4 percent while Quess Corp lost 3 percent in early trading.

!1 new updateClick here for the latest updates

WPI inflation falls to 12.07 percent in June; Food, crude oil prices are softening

IT stocks are leading the rally. Here are the top winners

Price as of 07/14/2021 12:17 pm, Click on company names to see their live prices.

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Mindtree shares 52-week high after Q1 earnings

Mindtree stocks rose over 9 percent on Wednesday after the IT company posted consolidated net income up 61.2 percent for the June quarter and expressed confidence in double-digit revenue growth in FY22.

Zomato IPO retail quota fully subscribed

Tata Metaliks stock is up over 8% over June quarter earnings

Tata Metaliks Ltd shares rose over 8 percent on Wednesday after the company reported net income of Rs 94.72 billion for the quarter ended June 30, 2021. After getting off to a firm start, the stock rose 8.06 percent to 1,299 rupees for the BSE.

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Discover and examine trading opportunities

Zomato IPO so far subscribed 16% on the first day

The rupee drops 12 paises in early trading to reach 74.61 against the US dollar

The Indian rupee lost 12 paises to 74.61 against the US dollar in opening trading on Wednesday as the strong US currency and weak domestic stocks weighed on investor sentiment.

Info Edge adds 1% to Zomato’s IPO

Info Edge’s shares rose over 1 percent in trading Wednesday as Zomato launched its initial public offering of Rs 9,375 billion. The Zomato issue includes an offer to sell from Info Edge, India, valued at Rs 375 crore, which owns 18.55 percent of the online grocery delivery and restaurant discovery platform.

NMDC shares up 2% after co-board approves the demerger of NMDC Steel

The state-run NMDC said Tuesday that its board of directors had approved the demerger of NMDC Steel Limited. In a BSE filing, NMDC said that NMDC Steel is its wholly owned subsidiary, which is not currently doing business.

We continue to believe that any significant correction in the market should be used as an opportunity to get into quality stocks

– Binod Modi, Head – Strategy, Trust Title

Bank stocks trade lower

Price as of 07/14/2021 10:05 a.m., Click on company names to see their live prices.

Nifty appears to be consolidating in the 15,600–15,900 range: analysts

Top winners and losers in the broader market

Happiest Minds, Just Dial, Vakrangee, Mindtree, Mphasis and Coforge were winners in the field, while Quess Corps, Shilpa Medicare, Edelweiss Financials, Max Financial, Oberoi Realty and Bank of India were under selling pressure.

There may be a sharp correction or the bull may keep running. Whatever the result, security lies in high-quality largecaps that now only move slowly, rather than smallcaps that fly away. There is a bubble in small caps that will end badly for new retail investors chasing those small caps. Investors can book some gains and invest the money in fixed income securities and continue to invest in high quality largecaps in the IT, metals, pharmaceuticals, cement and FMCG sectors

– Dr. VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services

Q3 result today:

Infosys, L&T Technologies, Hastun Agro Products, Craftsman Automation, Dodla Dairy and Tinplate Company of India are among the companies that will announce their quarterly results today.

Reliance Securities intraday selection:

Buy Aarti Industries: For today’s trading, a long position in the range of Rs 850-855 can be opened at a price target of Rs 876 with a strict stop loss at Rs 842. Buy City Union Bank: For today’s trade a long position can be initiated in the range of Rs 161-163 for a target of Rs 168 with a strict stop loss at Rs 159. Sell ​​Godrej Consumer Products: For today’s trading, a short position can be initiated in the range of Rs 950-958 for a target of Rs 925 with a strict stop loss at Rs 964.

Traders post profits in real estate stocks; Nifty Realty index down 0.4%

Top winners and losers in the Sensex pack

Opening Bell: Sensex loses 50 points, Nifty under 15,800; Just Dial jumps 4%, Quess Corp tanks 3%

Pre-open session: Sensex up 20 points, Nifty below 15,800

Q1 results today

Mindtree, Tata Metaliks, Shree Ganesh Remedies, Deccan HealthCare, WS Industries (India) and Gagan Gases are among the companies that will announce their quarterly results today.

Zomato’s initial public offering of Rs 9.375 billion opens today

The highly anticipated Zomato IPO opens for subscription today. The online grocery and restaurant platform raised Rs 4.197 billion from 186 anchor investors on Tuesday ahead of its initial public offering. The company told the exchanges that it had allotted Rs 55.22 billion of shares for Rs 76 per share to anchor investors.

SGX Nifty signals a negative start

Nifty Futures on the Singapore Exchange traded 53.5 points, or 0.34 percent, lower at 15,781, suggesting Dalal Street was off to a negative start on Wednesday.

Tech View: Nifty50 resistance at 15,900 at

Nifty50 had a positive session on Tuesday as it easily broke its immediate resistance at 15,750. The index formed a small bullish candle with a long wick on the daily scale, indicating that every intraday sale was bought. Analysts said the 15,900-15,915 zone would be a major hurdle and the 15,650-632 range would act as immediate support for the future.

Tokyo stocks open lower US falls

Tokyo stocks opened lower on Wall Street on Wednesday after falling as investors weighed how a rise in US inflation data would affect monetary policy. The benchmark index Nikkei 225 lost 0.74 percent or 211.64 points to 28,506.60 in early trading, while the broader Topix index fell 0.54 percent or 10.63 points to 1,957.01.

US CPI inflation climbs to 5.4% in June

The US Department of Labor report showed that the consumer price index rose 5.4 percent (non-seasonally adjusted) in the 12 months ended June, its highest level since August 2008. Even though leading Fed officials say the big price increases are temporary Persistently high inflation could lead policymakers to distance themselves from the massive economic policies that markets have loved since the beginning of the Covid-19 pandemic.

US stocks have leveled off

Major US stock indices closed lower Tuesday after government data showed inflation continued to rise in June. All three major indices had finished on Monday with records, but by the close of trading on Tuesday the Dow Jones Industrial Average benchmark was 0.3 percent lower at 34,888.79. The broad-based S&P 500 lost 0.4 percent to finish at 4,369.21, while the tech-rich Nasdaq Composite Index fell 0.4 percent to 14,677.65.

The rupee will rise on day 3 and close at 74.49 if the stocks rise

The rupee gained 9 paise to close at 74.49 against the US dollar on Tuesday, marking the third straight day of gains from foreign fund inflows and positive domestic stocks. On the interbank foreign exchange market, the local unit opened higher at 74.49 versus the greenback and experienced an intraday high of 74.41 and a low of 74.50 during the session.

Sensex, Nifty on Tuesday

At the closing bell, the BSE Sensex was 397.04 points, or 0.76 percent, higher at 52,769.73 – breaking its three-session loss margin. This was also the benchmark’s best daily gain since May 31st. Likewise, the broader NSE Nifty rose 119.75 points, or 0.76 percent, to settle at 15,812.35.

Good morning, dear reader! Here is something to start your day of trading

The post sensex today: Stock Market LIVE Updates: Retail investors make beeline for Zomato IPO. IT stocks in high demand. Profit booking in realty stocks. Mindtree jumps 8%. Wipro 4% first appeared on 1st News Link.

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[techminsolutions]

Top headlines: TaMo sees surprise Q4 loss; Canara Bank posts profit in Q4

Top headlines: TaMo sees surprise Q4 loss; Canara Bank posts profit in Q4

Tata Motors logs March-quarter loss Tata Motors Ltd posted a narrower quarterly loss on Tuesday, as semiconductor shortages and supply disruptions continued to hurt sales for the carmaker. Tata Motors, which owns Jaguar Land Rover (JLR), reported a consolidated net loss of Rs 7,605 crore for the fourth quarter, compared with a loss of Rs 9,894 crore a year earlier. Read more Canara Bank posts…

[moneycafe]

Top headlines: TaMo sees surprise Q4 loss; Canara Bank posts profit in Q4

Top headlines: TaMo sees surprise Q4 loss; Canara Bank posts profit in Q4

Tata Motors logs March-quarter loss Tata Motors Ltd posted a narrower quarterly loss on Tuesday, as semiconductor shortages and supply disruptions continued to hurt sales for the carmaker. Tata Motors, which owns Jaguar Land Rover (JLR), reported a consolidated net loss of Rs 7,605 crore for the fourth quarter, compared with a loss of Rs 9,894 crore a year earlier. Read more Canara Bank posts…

[automobilesz]

Strong JLR sales in China boost Tata Motors' quarterly profit

Strong JLR sales in China boost Tata Motors’ quarterly profit

[ad_1] BENGALURU, India — Tata Motors Ltd on Friday posted a 67.2% surge in quarterly profit. Sales at its luxury car unit, Jaguar Land Rover (JLR), improved in key market China as the country led a recovery in the global automobile industry from the pandemic. The Indian carmaker had logged losses for three straight quarters as the COVID-19 pandemic dented business in several of its key markets…

[news24fresh]

Tata Motors speeds to Q4 loss, sales fall

Tata Motors speeds to Q4 loss, sales fall

[ad_1]

Tata Motors Ltd. has revealed aggressive cost reduction and deleveraging plans after it reported a consolidated net loss of ₹9,894.25 crore for the fourth quarter ended March 31, compared with a profit of ₹1,117 crore a year earlier. Lower vehicle sales and the impact of COVID-19 on its domestic and the Jaguar Land Rover (JLR) luxury car unit hurt the business.

JLR recorded a loss of…

[khabrisala]

As covid-19 hits sales, Tata Motors turns focus to costs, cash optimisation

As covid-19 hits sales, Tata Motors turns focus to costs, cash optimisation

[ad_1]

Tata Motors Ltd reported weaker-than-expected numbers for the March quarter. The stock, which lost 4.7% Monday, is trading with a marginal loss of 0.5% in Tuesday’s session.

Revenue dropped 28% reflecting a sharp fall in automobile sales. Low sales adversely impacted the operating leverage. Operating profit margin more than halved. Add to this, the impairment charges pertaining to…

[boldlykeenblizzard]

View: Who will pay the car industry’s bills this time?

By Anjani Trivedi At the rate the coronavirus is spreading, car companies won’t be making vehicles or big profits for a while. Who’s going to foot their bills in the event of an economic downturn like 2008? A financial crisis-like bailout won’t be a good look. Heading into this slump, carmakers were hardly exercising restraint, splashing out on big, tech-savvy investments and electric vehicles. Many global brands like Ford Motor Co. botched their bets in China, the world’s largest market, and have struggled to keep up there as it weakened.

Now, from the U.S. to India, Vietnam and Thailand and elsewhere, auto giants are shutting down production. It means more than turning the lights off. Sales are expected to fall almost 15% this year to fewer than 80 million vehicles, according S&P Global Ratings. In the U.S., the drop may be the biggest since 2009. Even as China tries to get back to work, auto and parts factories will likely run at low capacity.

The pandemic is showing up vulnerabilities on balance sheets. Over the past two days, Moody’s Investors Services downgraded auto manufacturers including Toyota Motor Corp. and BMW AG, and put several others on review, including General Motors Co., citing “weaknesses in their credit profiles including their exposure to final consumer demand for light vehicles.” S&P downgraded Ford to junk status and put Toyota on review.

The billions of dollars of cash that car companies are sitting on may give investors comfort that contingency plans are in place. But automakers run cash-intensive businesses, paying suppliers and funding operations. Having a cushion helps in tough times, but not for long.

Unlike other cash-heavy enterprises, most also run so-called negative working capital, meaning their current liabilities are higher than current assets. A dollar upfront is better than a dollar in a few weeks. The reason they can do this is because they get paid by their dealers before delivery – especially in the U.S, which is a credit-driven market.

That’s all good when the cars are selling. But when things turn down, these companies start burning through cash quickly, as my colleague Chris Bryant has written. Pre-virus sales outlooks were already poor. The trouble with Covid-19 is that no one knows how long it will last or when buyers will return. That makes it harder to say how much cash they’ll need, part of the reason some are proactively drawing down their credit lines.

In the current gloom, it’s worth looking at how far every dollar of sales goes toward meeting operational expenses and paying down short-term debt, or the ratio of working capital to sales. Companies still have to meet their payables, but inventories aren’t being drained. During the financial crisis a decade ago, Bloomberg Intelligence’s Joel Levington notes the ratio started slightly negative and rose to 5%. If that occurred again, he estimates, an average automaker would need an additional $6.9 billion of capital. With cash needs cropping up across the economy, it’s unclear where that money would come from.

The descent can be quick: At the height of the crisis, Japanese automakers in the U.S. ran negative free cash flows of 830 billion yen ($7.7 billion), according to Goldman Sachs Group Inc., dropping from close to positive 2 trillion yen. In China, cash flows are highly correlated to profitability. If you’re running losses, working capital will bite.

The cascading effect of a cash crunch could run far and wide. Some large Chinese auto parts manufacturers rely on international automakers for 30% to 50% of their business to generate positive operating cash flow. “This could change quickly,” says Jefferies Financial Group Inc. analyst Alexious Lee.

Then there’s the debt coming due. Automakers haven’t piled on large amounts except for their financing arms. But, per Levington, as of last week $179 billion of debt had a 30%-plus chance of default. The convulsions in markets will make it more expensive to pay. The likes of Tata Motors Ltd.-owned Jaguar Land Rover Automotive Plc have seen their bonds trade down to as low as 59 cents on the dollar. Across the sector, more than $100 billion matures this year with almost 40% rated below A, he notes.

Financing arms, a big source of problems in 2008, have again become major drivers of operating profits. If China is any indication for how quickly things can sour, defaults on auto loan-backed securities rose sharply last month and prepayments fell to a record low.

The position of car giants is now reminiscent of the pre-financial crisis years. When Detroit’s automakers were on the verge of collapse, the U.S. government braved public rebuke and stepped in with $82 billion in various forms to avoid the economic pain of collapse. The bailout remains debated, but one thing is clear: Carmakers will need help this time, too. While Washington’s new $2 trillion stimulus could indirectly benefit the sector, prolonged pain would need more support.

Cars may have gotten better since the last crisis, but automakers haven’t readied their balance sheets or operations for one as severe as this is turning out to be.

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[ainvestops]

View: Who will pay the car industry’s bills this time?

By Anjani Trivedi At the rate the coronavirus is spreading, car companies won’t be making vehicles or big profits for a while. Who’s going to foot their bills in the event of an economic downturn like 2008? A financial crisis-like bailout won’t be a good look. Heading into this slump, carmakers were hardly exercising restraint, splashing out on big, tech-savvy investments and electric vehicles. Many global brands like Ford Motor Co. botched their bets in China, the world’s largest market, and have struggled to keep up there as it weakened.

Now, from the U.S. to India, Vietnam and Thailand and elsewhere, auto giants are shutting down production. It means more than turning the lights off. Sales are expected to fall almost 15% this year to fewer than 80 million vehicles, according S&P Global Ratings. In the U.S., the drop may be the biggest since 2009. Even as China tries to get back to work, auto and parts factories will likely run at low capacity.

The pandemic is showing up vulnerabilities on balance sheets. Over the past two days, Moody’s Investors Services downgraded auto manufacturers including Toyota Motor Corp. and BMW AG, and put several others on review, including General Motors Co., citing “weaknesses in their credit profiles including their exposure to final consumer demand for light vehicles.” S&P downgraded Ford to junk status and put Toyota on review.

The billions of dollars of cash that car companies are sitting on may give investors comfort that contingency plans are in place. But automakers run cash-intensive businesses, paying suppliers and funding operations. Having a cushion helps in tough times, but not for long.

Unlike other cash-heavy enterprises, most also run so-called negative working capital, meaning their current liabilities are higher than current assets. A dollar upfront is better than a dollar in a few weeks. The reason they can do this is because they get paid by their dealers before delivery – especially in the U.S, which is a credit-driven market.

That’s all good when the cars are selling. But when things turn down, these companies start burning through cash quickly, as my colleague Chris Bryant has written. Pre-virus sales outlooks were already poor. The trouble with Covid-19 is that no one knows how long it will last or when buyers will return. That makes it harder to say how much cash they’ll need, part of the reason some are proactively drawing down their credit lines.

In the current gloom, it’s worth looking at how far every dollar of sales goes toward meeting operational expenses and paying down short-term debt, or the ratio of working capital to sales. Companies still have to meet their payables, but inventories aren’t being drained. During the financial crisis a decade ago, Bloomberg Intelligence’s Joel Levington notes the ratio started slightly negative and rose to 5%. If that occurred again, he estimates, an average automaker would need an additional $6.9 billion of capital. With cash needs cropping up across the economy, it’s unclear where that money would come from.

The descent can be quick: At the height of the crisis, Japanese automakers in the U.S. ran negative free cash flows of 830 billion yen ($7.7 billion), according to Goldman Sachs Group Inc., dropping from close to positive 2 trillion yen. In China, cash flows are highly correlated to profitability. If you’re running losses, working capital will bite.

The cascading effect of a cash crunch could run far and wide. Some large Chinese auto parts manufacturers rely on international automakers for 30% to 50% of their business to generate positive operating cash flow. “This could change quickly,” says Jefferies Financial Group Inc. analyst Alexious Lee.

Then there’s the debt coming due. Automakers haven’t piled on large amounts except for their financing arms. But, per Levington, as of last week $179 billion of debt had a 30%-plus chance of default. The convulsions in markets will make it more expensive to pay. The likes of Tata Motors Ltd.-owned Jaguar Land Rover Automotive Plc have seen their bonds trade down to as low as 59 cents on the dollar. Across the sector, more than $100 billion matures this year with almost 40% rated below A, he notes.

Financing arms, a big source of problems in 2008, have again become major drivers of operating profits. If China is any indication for how quickly things can sour, defaults on auto loan-backed securities rose sharply last month and prepayments fell to a record low.

The position of car giants is now reminiscent of the pre-financial crisis years. When Detroit’s automakers were on the verge of collapse, the U.S. government braved public rebuke and stepped in with $82 billion in various forms to avoid the economic pain of collapse. The bailout remains debated, but one thing is clear: Carmakers will need help this time, too. While Washington’s new $2 trillion stimulus could indirectly benefit the sector, prolonged pain would need more support.

Cars may have gotten better since the last crisis, but automakers haven’t readied their balance sheets or operations for one as severe as this is turning out to be.

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The post View: Who will pay the car industry’s bills this time? appeared first on Invest Ops.

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[vsplusonline]

View: Who will pay the car industry’s bills this time?

New Post has been published on https://apzweb.com/view-who-will-pay-the-car-industrys-bills-this-time/

View: Who will pay the car industry’s bills this time?

By Anjani Trivedi At the rate the coronavirus is spreading, car companies won’t be making vehicles or big profits for a while. Who’s going to foot their bills in the event of an economic downturn like 2008? A financial crisis-like bailout won’t be a good look. Heading into this slump, carmakers were hardly exercising restraint, splashing out on big, tech-savvy investments and electric vehicles. Many global brands like Ford Motor Co. botched their bets in China, the world’s largest market, and have struggled to keep up there as it weakened.

Now, from the U.S. to India, Vietnam and Thailand and elsewhere, auto giants are shutting down production. It means more than turning the lights off. Sales are expected to fall almost 15% this year to fewer than 80 million vehicles, according S&P Global Ratings. In the U.S., the drop may be the biggest since 2009. Even as China tries to get back to work, auto and parts factories will likely run at low capacity.

The pandemic is showing up vulnerabilities on balance sheets. Over the past two days, Moody’s Investors Services downgraded auto manufacturers including Toyota Motor Corp. and BMW AG, and put several others on review, including General Motors Co., citing “weaknesses in their credit profiles including their exposure to final consumer demand for light vehicles.” S&P downgraded Ford to junk status and put Toyota on review.

The billions of dollars of cash that car companies are sitting on may give investors comfort that contingency plans are in place. But automakers run cash-intensive businesses, paying suppliers and funding operations. Having a cushion helps in tough times, but not for long.

Unlike other cash-heavy enterprises, most also run so-called negative working capital, meaning their current liabilities are higher than current assets. A dollar upfront is better than a dollar in a few weeks. The reason they can do this is because they get paid by their dealers before delivery – especially in the U.S, which is a credit-driven market.

That’s all good when the cars are selling. But when things turn down, these companies start burning through cash quickly, as my colleague Chris Bryant has written. Pre-virus sales outlooks were already poor. The trouble with Covid-19 is that no one knows how long it will last or when buyers will return. That makes it harder to say how much cash they’ll need, part of the reason some are proactively drawing down their credit lines.

In the current gloom, it’s worth looking at how far every dollar of sales goes toward meeting operational expenses and paying down short-term debt, or the ratio of working capital to sales. Companies still have to meet their payables, but inventories aren’t being drained. During the financial crisis a decade ago, Bloomberg Intelligence’s Joel Levington notes the ratio started slightly negative and rose to 5%. If that occurred again, he estimates, an average automaker would need an additional $6.9 billion of capital. With cash needs cropping up across the economy, it’s unclear where that money would come from.

The descent can be quick: At the height of the crisis, Japanese automakers in the U.S. ran negative free cash flows of 830 billion yen ($7.7 billion), according to Goldman Sachs Group Inc., dropping from close to positive 2 trillion yen. In China, cash flows are highly correlated to profitability. If you’re running losses, working capital will bite.

The cascading effect of a cash crunch could run far and wide. Some large Chinese auto parts manufacturers rely on international automakers for 30% to 50% of their business to generate positive operating cash flow. “This could change quickly,” says Jefferies Financial Group Inc. analyst Alexious Lee.

Then there’s the debt coming due. Automakers haven’t piled on large amounts except for their financing arms. But, per Levington, as of last week $179 billion of debt had a 30%-plus chance of default. The convulsions in markets will make it more expensive to pay. The likes of Tata Motors Ltd.-owned Jaguar Land Rover Automotive Plc have seen their bonds trade down to as low as 59 cents on the dollar. Across the sector, more than $100 billion matures this year with almost 40% rated below A, he notes.

Financing arms, a big source of problems in 2008, have again become major drivers of operating profits. If China is any indication for how quickly things can sour, defaults on auto loan-backed securities rose sharply last month and prepayments fell to a record low.

The position of car giants is now reminiscent of the pre-financial crisis years. When Detroit’s automakers were on the verge of collapse, the U.S. government braved public rebuke and stepped in with $82 billion in various forms to avoid the economic pain of collapse. The bailout remains debated, but one thing is clear: Carmakers will need help this time, too. While Washington’s new $2 trillion stimulus could indirectly benefit the sector, prolonged pain would need more support.

Cars may have gotten better since the last crisis, but automakers haven’t readied their balance sheets or operations for one as severe as this is turning out to be.

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Stock Market 27-Feb-2020

Corporate News-

Tata Motors' board approved committee gives nod to raise Rs5bn. DHFL assets not proceeds of crime, PMLA court says. Moody's downgrades rating of HPCL-Mittal Energy Ltd.

Management Speaks-

Coronavirus outbreak in China leading to higher prices of certain raw materials, says RK Goyal, Managing Director, Kalyani Steels.

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JLR parent Tata Motors posts quarterly profit

JLR parent Tata Motors posts quarterly profit

India’s Tata Motors Ltd reported a quarterly profit on Thursday, compared with a year-earlier loss, as the maker of British luxury car brands Jaguar and Land Rover kept a tight lid on costs.

http://feeds.feedburner.com/~ff/reuters/INtopNews?d=yIl2AUoC8zA from Reuters: Top News https://in.reuters.com/article/tata-motors-results/jlr-parent-tata-motors-posts-quarterly-profit-idINKBN1ZT16R?feed…

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Tata Motors' Jaguar Land Rover needs to get out of the mess it is in

Latest Updates - M. N. & Associates - by Anjani TrivediTata Motors Ltd.’s Jaguar Land Rover unit can’t seem to get back in the right lane.The Indian automaker’s luxury arm dropped into the red in the quarter ended Sept. 30, posting a pretax loss of 90 million pounds ($116 million), with Ebit margins below breakeven and volumes down. Sales in China, where the high-end market is still growing, tanked. JLR has long been a profit center for the whole company. This time it took the domestic Indian business down with it, reversing recent signs of recovery there.Not only was JLR’s performance dismal, there were few indications of a brighter future. The maker of Range Rovers and the E-Pace electric SUV ran more than 600 million pounds of negative free cash flow in the quarter, making a 2.3 billion-pound cash burn for the first half of the year – almost double the amount in the same 2017 period. Kenneth Gregor, chief financial officer of the U.K.-based unit, said he expected negative free cash flow for the full year.To show it’s trying to fix things, JLR announced Project Charge, a two- to three-year plan to boost profitability and cash flow. The aim is to bring in as much as 2.5 billion pounds over the next 18 months. Investment plans were cut from 4.5 billion pounds a year to 4 billion pounds for this year and the next, saving about 1 billion pounds overall – half of the six-month cash burn. In the latest quarter alone, though, total investment outlays were 1 billion pounds. Further reductions will be tough, because much of this spending isn’t variable.JLR blamed China, pointing to sagging consumer confidence in the world’s biggest car market. That’s true, though not necessarily for the high-end segment that JLR occupies. Even its American peer General Motors Co., which has lost overall market share in China, reported a sales pop for its luxury Cadillac models. Brands such as BMW, Mercedes and Audi increased sales there by 5 percent to 15 percent in the first nine months of the year. (JLR also cited generic factors like slowing Chinese economic growth, Brexit, trade tensions and higher tariffs.)66455761 Moreover, while the wider China market generally struck a balance between inventory, production and sales, JLR was unable to manage inventories for locally made and imported cars. And the debt burden is increasing, both in total terms and relative to Ebitda. Liquidity was bolstered by borrowings: JLR took out another $1 billion loan in September, which it drew down in October. The ratio of free cash flow to debt (the amount of debt that could be paid in a year if all free cash flow were used) is well below peers.The unit sold 500 million euros ($567 million) of bonds in September, though unlike previous issues, these didn’t contain a covenant capping dividends payable to Tata Motors. How far JLR can move at this pace is unclear: As of June, its quarterly ratio of liquid assets to all current liabilities had dropped to the lowest level since 2011. The parent was down, too, on that basis.JLR did report some cost improvements, but far too few to move the needle. Management needs to do more, and sooner, to get the carmaker back on course. Chartered Accountant For consultng. Contact Us: http://bit.ly/bombay-ca