Tata Motors drops nearly 9% post JLR Q1 update

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Shares of Tata Motors slipped as much as 8.5% to Rs 317 apiece in noon trade on Tuesday soon after Jaguar Land Rover announced its Q1 update. The auto major highlighted that the company’s subsidiary JLR is likely to report a cash outflow of about £1 billion with a negative EBIT margin for the quarter.

Overall, Jaguar Land Rover (JLR) reported retail sales for the first quarter ending 30 June 2021 of 1,24,537 vehicles, 68.1% higher than the 74,067 vehicles sold in Q1 last year. Retails were higher year-on-year in every key region including in the UK (up 186.9%), Europe (up 124.0%), Overseas (up 71.0%), North America (up 50.5%) and China (up 14%).

Commenting on the sales results, Thierry Bolloré, Jaguar Land Rover Chief Executive Officer said, “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, demonstrating the continuing appeal of Jaguar and Land Rover vehicles. While the present semiconductor supply shortages continue to be a challenge for the industry, we are encouraged by the strong demand we see for our vehicles.”

Despite the sales number being encouraging the company in regulatory filling said that “Jaguar Land Rover had about £3.7 billion of cash and short term investments (unaudited). Based on this and broadly in line with expectations given the supply constraints, the company expects to report a cash outflow of about £1 billion with a negative EBIT margin for the quarter. Total liquidity at the end of the first quarter was over £5.6 billion including a £1.9 billion undrawn committed credit facility (RCF).”

That apart the company was cautious about its outlook given the chip shortage scenario being 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, although we are continuing to work to mitigate this. We expect the situation will start to improve in the second half of our financial year,” the filing added.