The Tata Motors share price is rallying in trade today and surged nearly 3% intra-day. Are you also wondering why, especially after the automotive major posted disappointing Q1 numbers and the consecutive brokerage downgrades. Most brokerages are cautious on the stock price yet the share price of Tata Motors is one of the big gainers on Nifty today.
3 reasons why Tata Motors is surging in trade today –
Here are 3 key reasons why-
Tata Motors says no impact of rare earth curb yet
One of the big factors that’s supporting the strong rally in the share price is the fact that the company went on record and said that they have not yet faced any production delay due to the rare earth curb by China.
In his address after the company’s Q1 numbers, P Balaji, CFO, Tata Motors Group, said, “A lot of work is underway to derisk company given the rare earth curb. So far production has not been hampered for either Tata Motors or JLR. Taking cues from learnings coming from the approach that the company undertook due to the semiconductor crisis, we have put together an approach to derisk the process”
Maintain FY26 guidance for JLR
Tata Motors has maintained its FY26 guidance for JLR.For FY26, JLR has guided for 5-7% EBIT margin and near-zero free cash flow. While the US trade deals with UK/EU at 10-15% tariffs bring some relief, Jefferies believes that “JLR will continue to face severe business pressures due to rising competition and an additional 10% consumption tax in China, high customer acquisition cost & warranty expenses, and BEV transition, while its key models (RR, RR Sport and Defender) are now 2-4 years old.” According to them, the US duty impact should ease from Q1 level, but is likely to be offset by China tariff and absence of emission write-back.However, the CFO maintained that “JLR guidance intact a5-7%”
Ethanol Blending a concern
Speaking on the much debated Ethanol Bkending issue, the Tata Motors Group CFO, P Balaji clarified that the current batch of cars on sale are built in a way to tackle the corrosion that’s expected from the 20% ethanol blending. He explained that “current vehicles can handle 20% Ethanol blending. No stress on that count.”
Bad news priced in
Another popular assumptions amidst traders and brokers is that the street may have priced in some of the bad news and is looking forward to the company’s future growth plans including the Iveco acquisition and its impact on the CV industry that’s under pressure at the moment.