Covid-related disruptions had no impact on Jaguar Land Rover: Tata Motors

Reassurance comforted investors; Stock surged by 3.96 per cent

Tata Motors said on Thursday that the Covid-19 disruptions facing Jaguar Land Rover (JLR), its UK subsidiary, have had no impact on the company’s business. It assured that the firm remains on track with its guidance on cash flows and profitability.

“JLR has comprehensive contingency planning and actions in place to respond to ongoing Covid challenges and disruption. This is subject to constant review,” the firm said in a notification to the stock exchanges. Recent issues at UK ports have had no immediate impact for JLR, the firm said. 

“Our guidance of improved growth, profitability and cash flows in the second half of the year continues to hold,” the firm said.

The impact of the new coronavirus variant continued to be felt across the UK, prompting the health authorities to place more regions under the toughest restrictions from December 26, CNN World reported on Wednesday. British ports are facing disruptions as thousands of truck drivers are queuing up to get themselves screened for the new coronavirus strain.

The announcement by Tata Motors brought Christmas cheers for company’s investors. Shares rose 3.96 per cent on Thursday, closing at ~175.90 apiece 

They have been lapping up the stock since JLR reported a better-than-expected performance in the second quarter. Since the beginning of this year, the firm has gained 147.6 per cent -- outpacing the BSE Auto Index and the Sensex that gained 9.9 per cent and 13.9 per cent, respectively.  

Hopes of recovery are riding high on the back of improved volumes across the key markets. Demand is improving at JLR, as key markets such as China have recovered to pre-Covid levels. 

Further, most countries are now witnessing a pick-up in volumes, which resulted in the second quarter volumes rising 53 per cent quarter-on-quarter. JLR is expected to see a recovery in global demand, and we are building in double-digit volume growth (12-11 per cent) for FY22-23E, according to a recent research report by HDFC Securities.  

The recovery has prompted many brokerages to upgrade the ‘buy’ rating in the past month. They have also increased the target price of the stock. Besides JLR, a sustained recovery of the passenger vehicle business has also driven up ratings.