Tata Motors shares drop almost 13% as company forecasts poor sales of Jaguar Land Rover in September quarter
- Shares of
Tata Motorsfell to ₹311 from ₹357 in one hour as the company reported that the sales of its subsidiary, Jaguar Land Rover, will be affected in the next quarter due to chip shortages.
- However, Jaguar Land Rover registered 68% growth in its retail sales of 1.24 lakh vehicles in June quarter.
- The company expects chip shortages for JLR production to remain throughout the year and beyond.
AdvertisementShares of Tata Motors fell almost 13% to ₹311 from ₹357, in an hour between 1:42 p.m. and 2:41 p.m on July 6, as investors were disappointed after the company reported that the sales of its subsidiary, Jaguar Land Rover, will be affected in the next quarter due to chip shortages.
“Looking ahead, the chip shortage is presently very dynamic and difficult to forecast. Based on recent input from suppliers, we now expect chip supply shortages in the second quarter ended 30 September 2021 to be greater than in the first quarter, potentially resulting in wholesale volumes about 50% lower than planned,” said Thierry Bolloré, CEO at Jaguar Land Rover, in a press release.
The company expects the chip shortage to continue throughout the year and beyond.
The COVID-19 pandemic has reportedly driven up demand for semiconductor chips for use in electronics such as computers, as people work from home, and suppliers are struggling to adjust.
The global chip shortage has hit nearly every industry that makes or uses tech-enabled products. Hence, the demand has gone up leading to severe shortages that could drag till 2023.
Further, the company expects negative earnings before interest, taxes (EBIT) in the coming September quarter.
Meanwhile, the company registered 68% growth in its retail sales wherein vehicle sales jumped to 1.24 lakh vehicles in June quarter compared to the corresponding period last year.
Retails were higher year-on-year in every key region including in the UK (+186.9%), Europe (+124.0%), Overseas (+71.0%), North America (+50.5%) and China (+14.0%).
Shares of Tata Motors ended 8.5% lower at ₹316.60 on July 6.
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