Tata Motors recently announced huge discounts on its electric vehicles and passenger cars. Subsequently, on September 11, 2024, its shares fell by more than 6%. With this drop, the stock has dropped to Rs 977 (as of 14:45). At the same time, foreign brokerage UBS recommended selling Tata Motors shares, which further increased the pressure. UBS estimates that the stock could fall to Rs 825, about 16% below the current level.
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The UBS report claims that Tata Motors subsidiary JLR (Jaguar Land Rover) has seen its order book decline, even falling below the pre-Covid-19 level. Apart from this, JLR’s demand is likely to decline due to the economic slowdown in major markets like China. JLR has also indicated to increase the discount on its Range Rover Sport model. Although JLR has seen an improvement in its average selling price and margins in the past few years, the fall in demand in the current circumstances is a cause of concern for the company.
The company’s announcement weighed heavily on the stock.
Keeping the festive season in mind, Tata Motors has announced a discount of up to Rs 2.05 lakh on its various models, especially electric vehicles, hatchbacks and SUVs. The main reason behind this is the declining demand for passenger vehicles and the accumulation of a huge amount of inventory at dealerships. A 4.5% decline in dealership sales was recorded in August 2024, adding further pressure on the company.
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However, Tata Motors stock has proven to be a multi-valued asset for investors, delivering returns of 630% in the last five years and 120% in the last two years. But in the current situation, the company is facing a market downturn, to overcome which it is turning to new discounting and strategies.
