Press "Enter" to skip to content

Tata Motors Drops 10% As JLR Warns Of “Greater” Chip Shortages In Q2 – NDTV Profit

Tata Motors shares fell as much as 10% to hit an intraday low of Rs 311.45 on the BSE

Shares of Tata Motors, the parent of luxury car maker Jaguar Land Rover, crashed as much as 10 per cent to hit an intraday low of Rs 311.45 on the BSE after the company warned of negative operating profit margin or EBIT margin in the second quarter of current financial year as it expects chip supply shortages to be greater than in the first quarter.

“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 per cent lower than planned, although we are continuing to work to mitigate this,” Jaguar Land Rover said in a press release.

Jaguar Land Rover also said that it expects shortages will continue through to the end of the year and beyond.

“We expect an operating cash outflow of about 1 billion pounds with a negative EBIT margin in the second quarter and a substantial improvement in underlying operating cashflow in the second half of the financial year as chip supply improves,” Jaguar Land Rover added.

“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. We are taking strong steps to ensure the security of our supply chain for the future, working with our suppliers and chip manufacturers directly to increase the visibility and control over the chip supply for our vehicles,” Thierry Bollore, Chief Executive Officer, Jaguar Land Rover, said in a statement.

As of 3:05 pm, Tata Motors shares traded 7.4 per cent lower at Rs 320, under-performing the Sensex which was trading on a flat note.