While Tata Motor’s China business of JLR was sharply down, the company has begun to see impact in other markets
as well. For the India business, it expects 4QFY20 to see further impact (due to Coronavirus) on already expected weak performance due to BS-VI transition.
Thus far in the calendar year 2020, Tata Motors has underperformed the market by falling 50 per cent, as compared to a 15 per cent decline in the S&P BSE Sensex.
“This is not surprising in the context of a market-wide demand collapse in China in February due to COVID-19. The company notes that production in China seems to be gradually resuming and 80 per cent of dealer stores are now open, albeit with lower staff/muted footfall,” according to analysts at JP Morgan.
"A demand recovery in China could likely take time and downside risks still persist due to (a) the potential spread of the virus to other markets, (b) slow normalization in the supply chain, and (c) UK trade negotiations (Brexit)," the brokerage firm said.
The company, however, noted that the Chinese suppliers have resumed operations, albeit at sub-par operating levels. "The company is seeing visibility on production up to mid-March and it expects limited volume loss in FY4Q given the on-going BS-IV destocking. Delays in normalization on the supply-chain front, plus a fire at its key supplier in Pune (Varroc) could mean BS-VI restocking will be impacted in the market," it added.