MARKET PUNISHES TAMO AFTER RECORD LOSS

Tata Motors reported net loss of nearly ~27,000 crore for the quarter ended December on account of a slowdown in China’s car market. The company’s shares fell as much as 30 per cent, the most in 26 years, before ending 18 per cent lower at ~150.

“We are concerned about the magnitude of equity erosion led by investment write-offs, which could hurt debt covenants and lead to downgrades,” said Nitesh Sharma, analyst with PhillipCapital India. “Jaguar Land Rover performance was yet another disappointment. As per our checks with dealers in China the company hasn’t offered them additional incentives yet and is expected to roll out the same in Q4FY19.”

Brokerages slashed price targets on Tata Motors after the company reported biggest loss in India’s corporate history. The consensus 12-month price target for the stock is down to ~215 from ~252 earlier this month. Some brokerages have cut the target by as much as 50 per cent.