Tata Motors

History

2020: Decrease in market value to zero

In the middle of May, 2020 it became known that the market value of the Indian autocompany Tata Motors owning the British producer bonus Jaguar Land Rover reduced to zero because of COVID-19 coronavirus pandemic.

According to Bloomberg, the capitalization of Tata Motors created on the basis of a quotation rate by May 12, 2020 makes $3.7 billion. However, according to CLSA analytical company, because of crisis the debt of Tata Motors considerably grew, having exceeded capitalization, and the plan of the company for reduction of debt can be postponed for four-six quarters. Tata Sons Pvt Ltd parent company. already threw a lifebuoy in the form of preferential distribution of actions, but brokers consider that Tata Motors can be required the additional help. CLSA assume that in 2022 to a fiscal year the debt of Tata Motors will exceed $9 billion.

Dynamics of quotations of Tata Motors and stock index of car makers, data of Bloomberg

Division of Jaguar Land Rover - the only factor influencing assessment of the company, - the analyst of CLSA Amyn Pirani in the report noted, proving rating downgrade. - We believe that future investments in capital stock can be also used for financing of losses and therefore we do not attribute the company the cost of capital stock yet.

In India demand for cars began to fall even before the outbreak of a coronavirus, and because of a pandemic the leading car makers of the country in general lost an opportunity to sell cars. In 2020 Tata Motors suffered most and it appeared on the last place in the S&P BSE Auto index with drop in sales more than for 53%.

Seriously the pandemic struck also division of Jaguar Land Rover which problems began at the end of 2019 because of low demand in China, to Brexit and change of the European legislation concerning emissions. Tata looks for the strategic partner for business, but promised that it will not sell Jaguar Land Rover.

The market value of the owner of Jaguar Land Rover fell up to 0

CLSA considers that Tata Motors and division of Jaguar Land Rover should be recovered in 2021 financial year. According to Pirani, sale of the Indian business on production of cars can increase capitalization of Tata Motors by 92 billion rupees ($1.2 billion), however it "is improbable" in the conditions of crisis.^[1]

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