Tata Motors Passenger Vehicles Limited — financial distress indicators
Financial-health summary
Tata Motors Passenger Vehicles Limited's reported numbers place it in the 'Weak' financial-health band (distress score 55/100). The main indicators are operating profit does not cover interest, market-implied default probability >20% and current liabilities exceed current assets. Independently, the Ohlson accounting model puts its 1-year failure probability at 19% and the market-implied (Merton) default probability is 23.8%. In its favour: operating cash flow is positive over the latest 12 months.
Stress by dimension
Share price — last 12 months
Indicators behind the score
Each red flag shows the evidence from the company’s own filings and the financial or legal principle behind it. Points add to the 0–100 score.
Interest coverage (EBIT / interest) is -11.42×.
When EBIT < interest, debt service is funded from cash reserves or new borrowing — the classic precursor to payment default and covenant breach.
Merton distance-to-default 0.71 σ → PD 24%.
Structural (Merton/KMV) model: equity is a call option on assets; low distance-to-default means assets are close to the default point.
Current ratio is 0.84.
Short-term obligations exceed short-term resources — the company relies on rolling over credit.
Short-term debt is 1.5× cash on hand.
Maturity wall: debt due within a year must be refinanced, which is the most common proximate cause of filings.
Price is -62% from its 52-week high.
For financial firms a share-price run often precedes a deposit or funding run (confidence channel).
Operating margin fell from 2% to -9% in two years.
Sharp margin compression signals loss of pricing power or cost control.
Revenue vs net income
Cash generation
Debt vs cash vs equity
✅ Mitigating factors
- Operating cash flow is positive over the latest 12 months.
- High insider/promoter ownership (44%) aligns management with survival.
- Large market capitalisation — strong access to capital markets.
📰 Recent news scan
- Tata Motors Q1 profit falls 80.2% despite revenue riseYahoo Finance · 2026-08-14
- Tata Motors Passenger Vehicles Ltd (BOM:500570) (Q1 2027) Earnings Call Highlights: Record EV ...Yahoo Finance · 2026-08-13
- Stellantis and JLR sign US product development MoUYahoo Finance · 2026-05-21
- Stellantis Explores US Partnership With Jaguar Land Rover After $13 Billion PledgeYahoo Finance · 2026-05-20
- Tata Motors Passenger Vehicles Ltd (BOM:500570) Q4 2026 Earnings Call Highlights: Strong ...Yahoo Finance · 2026-05-19
- Tata Motors quarterly earnings fall 29.72%Yahoo Finance · 2026-05-15
⚖️ Indian legal pathway — the IBC, 2016
How insolvency starts
- A financial creditor (§7), an operational creditor after a demand notice (§§8–9) or the company itself (§10) can apply to the NCLT once a default of at least ₹1 crore occurs (§4).
- On admission a moratorium (§14) stops suits and recovery; the board is suspended and an insolvency professional runs the company.
- The Committee of Creditors approves a resolution plan with 66% of voting share (§30(4)) within an outer limit of 330 days (§12); otherwise liquidation (§33) under the §53 waterfall — equity ranks last. Defaulting promoters are generally barred from bidding (§29A).
Earlier warning stages
- RBI's Prudential Framework for Resolution of Stressed Assets (7 June 2019): lenders must review a borrower within 30 days of default and implement a resolution plan, or provide more.
- Listed companies must disclose loan defaults to exchanges under SEBI (LODR); a rating downgrade to “D” is a public signal.
- Auditors must report going-concern uncertainty (SA 570 / Ind AS 1).
Frequently asked questions
What do Tata Motors Passenger Vehicles Limited's financial-health indicators show?
As of 2026-10-09, Tata Motors Passenger Vehicles Limited's public financial data places it in the 'Weak' band with a distress score of 55/100, driven by operating profit does not cover interest, market-implied default probability >20% and current liabilities exceed current assets. This is a statistical screen of reported numbers — it does not mean the company is insolvent, has defaulted or will enter insolvency proceedings.
What is Tata Motors Passenger Vehicles Limited's financial distress score?
55/100 ('Weak'). Ohlson O-score -1.46 (model 1-year failure probability 19%). Merton distance-to-default 0.71 σ (model default probability 23.8%).
What works in Tata Motors Passenger Vehicles Limited's favour?
Operating cash flow is positive over the latest 12 months. High insider/promoter ownership (44%) aligns management with survival. Large market capitalisation — strong access to capital markets.
How are shareholders treated if a company enters insolvency?
Under the IBC the Committee of Creditors controls the resolution; the §53 waterfall pays secured creditors and workers first and equity last. In most resolution plans existing shareholders are wiped out or left with a token stake, and the company may be delisted.
Other Consumer Discretionary companies with distress indicators
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- Flexituff Ventures International Limited (FLEXITUFF)Very weak 100/100
- Praxis Home Retail Limited (PRAXIS)Very weak 100/100
- SEL Manufacturing Company Limited (SELMC)Very weak 100/100
- Spencer's Retail Limited (SPENCERS)Very weak 100/100
All Consumer Discretionary companies with distress indicators →
Methodology
Score = capped sum of rule-based red flags across seven dimensions (liquidity, solvency, profitability, cash flow, sales trend, market signal, news). Ohlson O-score (1980) gives an accounting-based 1-year failure probability; Merton distance-to-default (Bharath & Shumway 2008) gives a market-implied probability. Financial institutions use a capital-based rule set. Recalculated every trading day from the latest filings, prices and news.