India’s Tata Motors saw its shares fall by close to 5% on Monday as the carmaker blamed microchip supply problems for missing sales targets.
Tata’s sale volumes for its Jaguar Land Rover business were 75,307 for the second quarter, short of its 90,000 prediction made in August.
This was due to a low supply of specialised chips, the automaker said, adding that new supplier deals would boost sales in the second half of the fiscal year.
“We would need more clarity on the pace of production recovery at JLR to turn constructive,” J.P. Morgan analyst Amyn Pirani wrote in a note, downgrading the rating on Tata Motors to “neutral” from “overweight”.
He also said Tata Motors might not meet its target of 1 billion pounds ($1.11 billion) in free cash flow for JLR. The brokerage lowered its price target on Tata Motors to 455 Indian rupees ($5.52) from 525 rupees.
In 2023/24, demand for JLR vehicles are forecast to come under pressure from a broader industry slowdown with volumes expected to be 22% below 2018 fiscal year levels, Morgan Stanley analyst Binay Singh wrote in a note.
The average rating of 30 analysts covering Tata Motors was “buy” and median price target was 530 rupees, according to Refinitiv.
- Reuters, with additional editing from Alfie Habershon