Tata Motors Tanks 10 percent as company flags concerns over chip shortage
Published On: Tuesday, July 6, 2021 | By: Team KnowMyStock
Shares of Tata Motors tanked 10 per cent to Rs 311.53 on the BSE in intra-day trade on Tuesday after its UK subsidiary Jaguar Land Rover (JLR) said it expects an operating cash outflow of about £1 billion, with negative earnings before interest tax (EBIT) margin in the second quarter ended September 2021 (Q2FY21), due to the supply constraints. Based on recent input from suppliers, the company now expects chip supply shortages in the Q2FY22 to be greater than in the first quarter, potentially resulting in wholesale volumes to be about 50 percent lower than planned, although it said it is working to mitigate this. We expect the situation will start to improve in the second half of our financial year, the company said.“The present semiconductor supply issues represent a significant near-term challenge for the industry which will take time to work through but we are encouraged by the strong demand we see for when supply recovers,” said Thierry Bollore, chief executive officer, JLR.
The company is currently focusing on the production of high-margin vehicles for the chips currently available and making chip- and product-specific changes wherever possible.
“We are pleased to see the gradual economic recovery from the pandemic with customers returning to our showrooms driving double-digit year-on-year sales growth in all regions,” Bollore said.
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