Tata Motors Ltd plunged nearly 10 per cent early on Thursday to its lowest level since December 13, after the management indicated that EBITDA margin is likely to be slightly lower in the December quarter as compared to margins reported in the previous two quarters.
According to the management, EBITDA is likely to be in the region of levels reported for the previous two quarters but margins may take a dip.
At 09:17 am, Tata Motors was trading 9.20 per cent lower at Rs 285. It has hit a low of Rs 282.05 and a high of Rs 290 in trade today. Tata Motors ADR tanked by 10 per cent on NYSE.
"The company further stated that, Free cash Flow (FCF) for JLR will be negative in 3QFY2013 primarily owing to higher working capital requirements," the company said in a statement.
Nonetheless, FCF will be positive for the first nine months of FY2013. However, revenue will be higher than the previous two quarters reflecting the higher sales volumes.
Further, the management has increased its capital expenditure guidance for FY2014 to GBP2.75bn as against GBP2bn earlier. As a result, the management expects FCF to turn negative in FY2014.
"The management commentary for JLR on the margin front is slightly below our estimates. For JLR, we expect top-line to increase 10 per cent YoY to GBP 4.1bn," Angel Broking said in a report.
"However, on the margin front, we expect the company to report margins of 14 per cent, slightly higher than 13.8 per cent reported in 1HFY2013," added the report.
The Mumbai-based brokerage firm expects the stock to see correction in domestic markets as well once the trading resumes on Thursday. Angel Broking has an 'accumulate' rating on the stock with an SOTP based target price of Rs 337.
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