InvestorQ : Do you see the Tata Motors stock benefiting from the recent BREXIT deal announcement?
Katherine Gonsalves made post

Do you see the Tata Motors stock benefiting from the recent BREXIT deal announcement?

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rhea Babu answered.
9 months ago
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Late last week, UK and the EU signed on the BREXIT trade deal bringing to an end almost four years of uncertainty. While the deal does not change the basic structure of the secession in any way, it surely allows trade free of tariffs and quotas to continue between the UK and EU. The size of this UK-EU trade is nearly £700 billion.

One big beneficiary of this trade deal from India is Tata Motors, which clearly appears to have benefited from the BREXIT deal considering the strong dominance of Jaguar Land Rover in driving auto sales globally. Under the new deal, JLR can continue to export and import its products between the UK and the EU without tariffs or quotas.

The deal was extremely critical to Tata Motors because JLR accounts for over 80% of revenues of Tata Motors. In fact, this uncertainty over BREXIT had been the biggest overhang for the Tata Motors stock and now that has bene eliminated. Regarding whether JLR can continue to remain headquartered in UK, that remains to be seen.

Above all, this deal will surely help JLR to consolidate on the sales recovery in the second quarter of the fiscal year, which was up 53% sequentially. This will also be substantially assisted by the fact that JLR has been pursuing its cost reduction program over the last two years and that had resulted in 11.1% EBITDA margins in Q2.

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