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Trending Company: Tata Motors.
by 5paisa Research Team 12/10/2021

The sentiment in the Indian bourses is bullish on the automotive sector with Tata Motors outperforming the sector by a huge margin.

The share price of Tata Motors stock rose 210% in one year as compared to the BSE Auto which rose by 40.4%. On a half-yearly basis, Tata Motors gave price returns of 47.2% vis-a-vis its benchmark at 21%. One month price returns on Tata Motors are an impressive 41.2%, whereas the BSE Auto sector gave price returns of 13.2%.

The stock recently touched its 52-week high of Rs 432.

Such a dream run on the bourses is validated by the strong sales numbers of the company.

The Tata Motors Group global wholesales in Q2 FY22, including Jaguar Land Rover, were at 2,51,689, higher by 24%, as compared to Q2 FY21. Global wholesales of all passenger vehicles in Q2 FY22 was at 1,62,634, higher by 11% as compared to Q2 FY21. Global wholesales for Jaguar Land Rover were 78,251 vehicles, Jaguar sales for the quarter were 13,944 vehicles, while Land Rover sales for the quarter were 64,307 vehicles, the company said in a press release.  

The automotive arm of the conglomerate Tata Group, however, was impacted by the global semi-conductor shortage on production and consequently, the retail sales number were constrained. Retail sales of all models were lower year-on-year except for the new Land Rover Defender, which retailed 16,725 vehicles, up 70.4% year-on-year, making it the bestselling model in the quarter.

Key takeaways:

1) The company is riding high on the demand for automobiles as the world is returning to normalcy post the pandemic and hopes of a fulfilled festive season in India is setting the momentum for auto sales in general. The company’s strong order books bear witness to that as it recorded sales of over 125,000 vehicles in its luxury car segment JLR.

2)Due to its global presence in major markets and no single market contributes to more than 20% of its revenues. The diversified market works well in favour of the company.

On the home front,

3)The auto giant is a formidable player in the Commercial Vehicle segment, holding the leadership position with a market share of 43/5 approx. The demand for commercial vehicles is seeing a cyclical recovery.

4) Where auto sales numbers of Maruti Suzuki, Hyundai reported a decline in Q2 2022 numbers, Tata Motors registered a sales growth of 18% with 41,116 units sold in Q2 2022 as compared to 34,847 in Q2 2021.

5) The market leader in the EV segment has already registered its highest quarterly sales 2,704 units for the recent quarter.

6) The global semiconductor supply issue represents a significant near-term challenge for the industry which will take time to work through. The disruption in the supply chain is impacting the costs for the auto companies but a strong player like Tata Motors backed with strong financial standing and sufficient liquidity is well poised for the short term impact and is confident of reporting positive cash inflow from operations.

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