Tata Motors loses over a billion dollars in market value

• Tata Motors stock falls over 17% on Friday.
• Analysts have cut earnings estimate by up to 35%.
• Company's luxury car unit Jaguar Land Rover is faced with a slowdown in China and the risk of a hard Brexit.

Tata Motors lost over 17% of its stock value on Friday (February 8) after the Mumbai-based company reported a consolidated quarterly loss of ₹26,961 crore, the biggest in its history. Analysts have cut the company's earnings estimate by up to 35% despite company's attempts to sugar-coat the depleting fortunes of its luxury car brand Jaguar Land Rover (JLR).

The slowdown in China, which is a huge market for JLR, had dented margin and eroded profit in the last quarter ended December 2018.

The company also cut its margin estimate citing rising business uncertainties. “The 4-7% guidance was for the period between FY20 and FY22. That is something that we have now calibrated to 3-6%," PB Balaji, CFO, Tata Motors, said.

The luxury car market was down 15% year-on-year in China. However, the same for JLR was down 47% to 22,000 units, which means the company is performing way worse than its peers like BMW and Audi. With the risks emerging from Brexit looming large, the outlook is rather bleak for Tata Motors.

The company has written down the value of the JLR business by 37.5% due to the growing risks. If the deal between UK and the European Union is worse than expected, it may hit the demand for luxury cars like JLR and the fall in sales as a result of it may further erode the share value.

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