Tata Motors dips 5% on lower-than-expected JLR wholesale volumes in Q2

However, Tata Motors said it is witnessing healthy demand for its products with the order book increasing to ~2.05 lakh units vs. ~2 lakh units as of Q1FY23

Shares of Tata Motors dipped 4.5 per cent to Rs 393.70 on the BSE in Monday's intra-day trade after the company reported a lower-than-expected Jaguar Land Rover (JLR) wholesale volume growth of 4 per cent quarter-on-quarter, at 75,307 units (excluding China JV) for the September quarter. However, retail sales of JLR for Q2FY23 were 88,121, up 12 per cent QoQ, driven by an uptick in China, North America, and RoW markets.

Tata Motors said this improvement was lower than planned, primarily due to a lower than expected supply of specialised chips from one supplier which could not be readily re-sourced in the quarter. "This was mitigated partially by further prioritisation of production to the highest margin products, while new agreements with semiconductor suppliers are expected to enable sales improvements in the second half of the fiscal year," the company said in press release.

That said, Tata Motors said it continues to see strong demand for its products, with global retail orders again setting new records in the quarter. As at Q2FY23, the total order book has grown to 205,000 units, up around 5,000 orders from Q1FY23.

“Wholesale dispatches come as a negative surprise to us and were significantly lower than the commentary issued by Tata Motors setting 90,000 wholesales target during Q1FY23 call,” ICICI Securities said in a note.

The company cited chip constraints limiting execution capabilities on the JLR front but new agreements with semiconductor suppliers are expected to enable sales improvement in the second half of the fiscal year. Encouragingly, however, the company is witnessing healthy demand for its products with the order book increasing to ~2.05 lakh units vs. ~2 lakh units as of Q1FY23, the brokerage firm said.

"All three businesses of Tata Motors are in the recovery mode. While the India CV business will see a cyclical recovery, the India PV business is in a structural recovery mode. JLR is also witnessing a cyclical recovery, supported by a favorable product mix. However, supply-side issues will defer the recovery process. While there will be no near-term catalysts from the JLR business, the India business (~50 per cent of SoTP) will see a continued recovery. The stock trades at 16.3x FY24E consolidated EPS and 2.8x P/B," Motilal Oswal Financial Services said in company update. The brokerage firm maintains a ‘buy’ rating on Tata Motors with a target price of Rs 510 per share