NEW DELHI: Auto major Tata Motors' share fell 9.07 per cent on Friday to close at Rs 114.25 on the BSE. The fall is attributed to 85 per cent y-o-y drop in February retail sales of Jaguar Land Rover (JLR) cars in China because of Coronavirus and its financial impact on the company.
The outbreak, according to company estimate, will reduce JLR's full-year EBIT (earnings before interest and tax) margin by about one per cent.The stock of Tata Motors was trading at its lowest level on Friday since October 3, 2019. In the past one month, the stock has tumbled by 37 per cent.
During the first half of February, about 20 per cent JLR dealers in China were open, which has since improved to now over 80 per cent, although most are still operating with reduced staffs and facilities, the company said. JLR expects this to improve over the course of March, however, retail sales are expected to recover more gradually.
The sharp fall in sales comes at a time when Tata-owned JLR has been witnessing a turnaround in China sales, also its biggest market. JLR sales in China grew on an average about 25 per cent year-on-year (y-o-y) for six months from July to December 2019 and the company continued to see strong growth for the first three weeks of January.
Tata Motors said that for domestic business, Q4 performance was already planned to be significantly impacted due to the switch over from BS-IV to BS-VI and the shortage of parts is likely to have some additional impact on specific BS-VI models, which is expected to be secured in coming months. In the domestic market, Tata is also battling a prolong slowdown.