InvestorQ : Why did Tata Motors stock correct so sharply on Tuesday 06 July?
Dawn Cherian made post

Why did Tata Motors stock correct so sharply on Tuesday 06 July?

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Mitali Bhutta answered.
4 months ago
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Tata Motors surrendered nearly 10% from the peak of the day after its UK based unit, Jaguar Land Rover, projected rather eerily that JLR would see an operating cash outflow of about £1 billion in Sep-21 quarter. In addition, JLR is also guiding for negative EBIT margins in the Sep-21 quarter. This is likely to be triggered by supply chain constraints caused by the pandemic as well as the tremendous shortage of microchips faced by most auto companies.

In the Jun-21 quarter, it may be recollected, that JLR had reported 68% growth in retail sales numbers. However, JLR still appears to be fairly confident of strong demand for its products when semiconductor supply ultimately improves to normal levels. However, based on recent estimates coming from Taiwan, the situation could take 3-4 years to improve as fresh capacities are a fairly elaborate and laborious process in the microchip industry.
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