Tata Motors acquired JLR for $2.3 Billion (USD-INR 42.48) in 2008 has now written it off at $3.8 Billion (USD-INR 71.44). Basically, they bought JLR for ₹9,770 cr and as on Q3FY19, they have taken an impairment loss of ₹27, 837.91 cr. They have taken a 3 times impairment loss than what they purchased it for back in 2008. Is this a good sign? Do they think going forward that book value may further depreciate? Is it time to accumulate? Well, let’s see.
The Math
| Particulars | Amount |
| Shareholder’s Eq. (March 2018) (in ₹’Crore) | 95,428.00 |
| No of shares O/s (in crore) | 288.73 |
| BVPS (March 2018) (in ₹) | 330.50 |
| Adjusted BVPS (March 2018) (in ₹) | 281.00 |
| Loss/sh for Jun’18 and Sep’18 quarter (in ₹) | 10.22 |
| Loss/sh for Dec’18 quarter including Impairment loss (in ₹) | 96.41 |
| Expected BVPS (Jan 2019) (in ₹) | 174.37 |
The Book Value is now adjusted to around CMP. As on yesterday, it was at 0.66x Price to BV.
Apart from this change, the overall result was not very good either, the Revenue is up 2.8% & EBITDA fell by 3.2%, the margins contracted by 3% to 8.5% from 11.5%.
Our overall view is to stay away until it shows at least 4 quarters of higher earnings with a quick margin recovery.