Shares of Tata Motors Ltd. fell to the lowest in two months after the automaker’s luxury arm said it expects chip shortages to worsen in the ongoing second quarter, hurting sales. Still, that didn’t deter most analysts from staying bullish on the company.
Jaguar Land Rover on Tuesday said chip shortages in the quarter ending September are expected to be greater than in the preceding three months, resulting in wholesale volumes about 50% lower than planned during the period.
Chip shortage is very dynamic and difficult to forecast, Tata Motors said in an exchange filing. “Some level of shortages will continue through to the end of the year and beyond.” The company, however, will prioritise production of higher margin vehicles using the available chip supply, and expects the situation to start improving in the second half of the ongoing financial year.
Analysts, too, expect Tata Motors to start to turn around by the next fiscal, defying the near-term pressures. Of the 34 analysts tracking the stock, 21 have a ‘buy’ rating, seven suggest a ‘hold’ and six recommend a ‘sell’, according to Bloomberg data. The average of 12-month consensus price targets implies a upside of 16.2%.
To read what analysts had to say, click here
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