JLR’s India business has no value, says CLSA

Bloomberg

With the coronavirus pandemic crippling demand for automobiles worldwide, Tata Motors Ltd is worth nothing without its luxury unit Jaguar Land Rover (JLR), according to CLSA Ltd.
The $3.7 billion Indian auto company faces a significant increase in debt due to the crisis, and its plan to deleverage may be delayed by four to six quarters, CLSA said. It has already received a lifeline from parent Tata Sons Pvt Ltd in the form of a preferential equity allotment, and the brokerage thinks further aid could be required. “JLR is the only driver of its valuation,” analyst Amyn Pirani wrote in a report, downgrading Tata Motors to underperform from buy. “We believe future equity infusions are also likely to be utilised for loss funding and hence we do not attribute any equity value to its India business.”
Indian demand for passenger vehicles was slumping even before the virus outbreak. With the pandemic forcing a strict lockdown, the nation’s top carmakers couldn’t ship a single vehicle to dealers in April. Tata Motors has been the worst performer on the S&P BSE Auto Index this year with a decline of over 53%.