Tata Motors shares slip over 4% in early trade, here's why

Shares of homegrown auto major Tata Motors fell over 4 per cent today after the firm's UK arm Jaguar Land Rover (JLR) reported a 4.9 per cent decline in retail sales in Q2. Sales fell to 8,121 units in Q2 against 92,710 units in the corresponding quarter of previous fiscal. Additionally, sentiment around the Tata Motors stock was negative with JPMorgan downgrading the scrip to neutral from overweight. The brokerage said downgrade occurred due to a delay in deleveraging timelines at JLR. A delay in free cash flow generation raises risks to JLR's debt reduction targets.

It also trimmed FY23-25 consolidated earnings per share (EPS) estimates of the Indian auto major by 12-25 per cent.

The brokerage cut its target price to Rs 455 from the previous target of Rs 525.

Subsequently, shares of Tata Motors opened with a loss of 2.21 percent at Rs 403.10 against the previous close of Rs 412.20 on BSE. The stock extended losses to an intraday low of Rs 393.70, down 4.49 per cent on BSE.

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The share has been falling for the last two sessions. Tata Motors is trading lower than 5 day, 20 day, 50 day, 100 day and 200 day moving averages. Market cap of the firm fell to Rs 1.31 lakh crore. The stock has gained 3.51 per cent this year but declined 18 per cent in 2022. On Nifty, the stock was the top loser, falling 4.54 per cent to Rs 393.40 against the previous close of Rs 412.15.

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It touched a 52-week high of Rs 536.50 on November 17, 2021 and hit a 52-week low of Rs 366.05 on May 12, 2022 on BSE. Total 6.45 lakh shares of the firm changed hands amounting to a turnover of Rs 25.63 crore. Market cap of the firm rose to Rs 1.31 lakh crore on BSE.

Commenting on the outlook of Tata Motors stock, Abhijeet from Tips2trade said, "From a short-term perspective, despite being loss making and heavily in debt, Tata Motors could recover smartly from current levels for targets of Rs 431- Rs 446 in the near term."

Pranit Arora, co-founder & CEO, Univest said, "Tata Motors may have taken the lead in EVs, but the burden of JLR continues to weigh it down despite leadership in four-wheeler EVs."

Meanwhile, Sensex plunged 721 points or 1.17 per cent to 57,470 in opening trade in line with global cues. Nifty lost 220 points or 1.27 per cent to trade at 17,095. Tata Motors, Asian Paints, and IndusInd Bank were the top losers on Nifty.