Tata Motors Share hit 10 % lower : As JLR warns Chip deficit

As we know about the pandemic situation around the world. We saw a lot of different impacts due to the shortage and supply of many products. Today TATA MOTORS, the parent company of JLR hit a temporary 10% lower circuit.

Jaguar Land Rover in the September quarter, as an automobile manufacturer struggles to make alternative arrangements for their chips shortage. Hence, leading to a 50 percent decline in their production.

According to a  media information report from JLR, the company had about £3.7 billion of cash and short-term investments. Based on this and broadly aligned with the exception given, the supply constraints expect to report a cash outflow of about £1 billion with a negative EBIT margin for the quarter according to the company.

Jaguar Land Rover presently expecting to have a chip supply deficit of more than 50 percent of the anticipated volume in the second quarter ending on 30 September 2021. Once the semiconductor supply finally improved JLR continues to exhibit high demand for their goods Today, JLR has over 110,000 worldwide retail orders.

“In the above scenario above, we expect an operating cash outflow of about £1 billion with a negative EBIT margin in the second quarter and substantial improvement in underlying operating cash flow in the second half of the financial year as chip supply improves,” said Thierry Bollore, chief executive officer, JLR.

Why Tata Motors hit the lower circuit?

Today tata motors have hit the lower circuit because of chip shortage news. Many are confused about what should be done whether to sell their holdings or use the opportunity to buy. After reaching a 10% lower rs 311,45 circuit, Tata Motors finished 8.41% down at Rs 316.95 on BSE. In Rs 147.90, 5.31percent of the differential voting rights closed. At 52.861.18, the S&P BSE Sensex benchmark was down 18,82 or 0,04%.

This is not new news for Equity Market globally. People have been reading this news for a few months now. The recent incident of unexpected declines in Adani Group stocks and sharp fall in Tata Motors today are just warning signs of how volatile markets can turn.

There are expectations that you might see volume pushed out to FY23 from 22 as the chip situation improves. ’22 guidance from most brokerages might be revised downward, ’23 upwards. Product Mix shift to high margin prods likely. Though Volume dip may outweigh Margin hike.

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