The shares of Tata Motors recover from the day’s low and are now (around 1:00 pm) trading with meager decline by half a per cent to Rs 315 per share on the BSE on Wednesday. On an intraday basis, the scrip fell by 3.5 per cent today to touch its day’s low of Rs 306 apiece at open today.

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Since yesterday, the stock has declined nearly 12 per cent as the UK-based subsidiary Jaguar and Land Rover (JLR) sees negative EBIT in the second quarter of fiscal 2022 and also concerned about the shortage of semiconductor chips in the coming months.

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Tata Motors is one of the favourite stocks of ace investor Rakesh Jhunjhunwala, who holds 42,750,000 shares, comprises of 1.3 per cent stake in the company, as per the BSE data.

On Tuesday, the stock declined by 10 per cent intraday immediately after JLR’s update. However, it ended over eight per cent yesterday to Rs 316.95 per share on the BSE, as compared to a 0.04 per cent fall in the S&P BSE Sensex.

Tata Motors in its filing to exchanges on Tuesday said JLR expects an operating cash outflow of about £1 billion, with negative earnings before interest tax (EBIT) margin in Q2 amid supply constraints.  

It further said, the company expects chip supply shortages in the Q2FY22 to be greater than in the first quarter, potentially resulting in wholesale volumes to be about 50 per cent lower than planned.

The market analyst Simi Bhaumik being bullish on the stock expects more correction around Rs 300-295 per share. She recommends to hold the stock and also points out this as buying opportunities to new investors for a target of Rs 400-450 per share in the next year.

She explains, the current correction is timely and perhaps would decline further if it closes below Rs 310 per share levels today.