Why Tata Motors Inventory Is Falling? 4 Key Causes Driving The Decline

New Delhi: Tata Motors, as soon as a star performer on Dalal Avenue, has hit a tough patch in current months. The corporate’s inventory, which soared to an all-time excessive of Rs 1,179 in July 2024, has plunged by 35.44 per cent to Rs 787 as of December 16. This marks the steepest fall among the many 15 car shares within the Nifty Auto index.

Tata Motors And Nifty Auto Index

Tata Motors carries vital weight within the Nifty Auto index, rating second with a 15.31 per cent contribution. Mahindra & Mahindra (M&M) leads the index with 24.24 per cent, whereas Maruti Suzuki and Bajaj Auto maintain 13.36 per cent and 9.19 per cent, respectively. Collectively, these 4 firms make up 62.1 per cent of the index’s weight.

Regardless of the sector’s challenges, the Nifty Auto index has proven resilience, recovering partially from an 18 per cent decline over the past two months. As of December 16, the index is 15 per cent away from its all-time excessive. In distinction, Tata Motors’ efficiency lags behind its friends. Whereas M&M is buying and selling simply 3-4 per cent beneath its peak, Maruti Suzuki is down 18 per cent, and Bajaj Auto has dropped 32 per cent in the identical interval.

What’s Inflicting Tata Motors’ Decline?

The challenges for Tata Motors span throughout a number of enterprise segments, together with home passenger and business automobiles and its premium model, Jaguar Land Rover (JLR). Listed below are the 4 key causes behind the dip:

1. Struggles In Business Automobiles (CVs)

Tata Motors, which holds a 38.1 per cent market share within the home CV market, is dealing with headwinds. In Q2 FY25, home wholesale CV volumes dropped by 19.6 per cent year-on-year resulting from elements like a slowdown in infrastructure initiatives, decreased mining exercise, and decrease fleet utilization attributable to heavy rains. This led to a income decline of 13.9 per cent in Q2 and 5.2 per cent in H1 FY25.

2. Sluggish Passenger Automobile And EV Gross sales

Tata Motors’ passenger automobile gross sales, together with electrical automobiles (EVs), have additionally slowed down. The just lately launched Curvv EV, which accounts for 20 per cent of EV bookings, confronted ramp-up points. Nevertheless, the corporate expects to resolve these issues and launch three to 4 new variants within the second half of FY25.

3. Stress From Reductions

This festive season noticed aggressive discounting throughout the auto trade, and Tata Motors was no exception. The corporate supplied reductions of as much as Rs 2 lakh on inner combustion engine (ICE) automobiles. Even EVs just like the Nexon noticed value cuts of as much as Rs 3 lakh, particularly after the launch of the Curvv electrical SUV coupe.

4. JLR’s EBITDA Margins

Jaguar Land Rover (JLR) has been dealing with challenges with its EBITDA (earnings earlier than curiosity, taxes, depreciation, and amortisation) margins, which have been underneath pressure for the previous two quarters. The corporate has additionally fallen in need of its preliminary steerage for the 12 months in key areas, together with quantity development, profitability, and free money circulate technology.

(Disclaimer: The above article is supposed for informational functions solely, and shouldn’t be thought-about as any funding recommendation. Occasions Now Digital suggests its readers/viewers to seek the advice of their monetary advisors earlier than making any money-related selections.)