Tata Motors share price falls as semiconductor shortage hits JLR volumes; analysts remain bullish

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Updated: July 08, 2021 12:52 PM

Tata Motors is the automobile unit of the Tata Group. The company manufactures passenger cars, trucks, coaches, buses, sports cars, construction equipment and military vehicles.

Tata motors share price, tata motorsTata Motors share price has tanked nearly 10% this week. (Image: REUTERS)

Tata Motors share price has slipped nearly 10% so far this week, as investors reacted to the fall in wholesale volumes at Jaguar Land Rover owing to the global semiconductor shortage. The luxury car subsidiary of Tata Motors, earlier this week, said that its wholesale volumes came in at 84,442 units against the planned ~1.15 lakh units, down 27% in the first quarter.  On Thursday Tata Motors shares were trading down 1.8% at Rs 311 per share. Earlier on June 15, Tata Motors hit a fresh 52-week high of Rs 360.55 per share. The auto manufacturer has a market capitalization of Rs 1.03 lakh crore.

Check Live Price: Tata Motors 

Tata Motors Historical Price: Tata Motors Share price in the last 10 trading session

The share price of Tata Motors has slipped 8.44% during the last 10 trading sessions. On June 25, Tata Motors was trading at Rs 339.65 per share. The stock continued to move higher till the beginning of this week, however, it slipped nearly 10% on Tuesday after the company informed investors of the fall in wholesale volumes of Jaguar Land Rover. 

However, analysts continue to remain bullish on the stock. Although Jaguar Land Rover continues to expect weak wholesale volumes even in the second quarter of the current financial year owing to the semiconductor shortage. The company expects Jaguar Land Rover to see a cash outflow of ~GBP 1 billion and negative EBIT margin in Q1 and Q2. However, ICICI Securities highlighted that Jaguar Land Rover has sufficient liquidity of ~EUR3.7 billion in cash and short-term investments as of the first quarter. 

“While there would be no near term catalysts from the JLR business, the India business (~50% of SoTP) would see a continued recovery. The stock trades at 9.2x FY23E consolidated EPS and 1.7x P/B,” analysts at Motilal Oswal said. The brokerage firm has a target price of Rs 400 on the stock. ICICI Securities has a target price of Rs 528 apiece.

Tata Motors History and Company profile

Tata Motors is the automobile unit of the Tata Group. The company manufactures passenger cars, trucks, coaches, buses, sports cars, construction equipment and military vehicles. Formerly known as Tata Engineering and Locomotive Company (TELCO), the company was founded in 1945. Tata Motors manufactured its first passenger vehicle in 1991. Tata Motors also owns South Korean truck manufacturer Daewoo and the British luxury vehicle manufacturer Jaguar Land Rover. 

Recently, Tata Motors have renewed their offerings in the passenger car segment with the launch of cars such as Tata Tiago, Tata Tigor, Tata Nixon, Tata Harrier, and Tata Altroz. Earlier this month, Tata Motors announced that Both the Jaguar and Land Rover brands would undergo transformation by electrification – six new all-electric Land Rover models would be introduced in the next five years and Jaguar would be completely reimagined as a purely electric brand from 2025.

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