The fears were exacerbated by the steady rise in COVID-19 cases across Europe, one of JLR’s biggest markets. After touching a low of Rs 98.9, the firm’s shares closed at Rs 99 on the BSE, down 6.43 per cent on Wednesday. Thus far in calendar year 2020, Tata Motors has underperformed the market by falling 50 per cent, compared to a 15 per cent decline in the S&P BSE Sensex.
As Italy — the hardest hit in Europe — entered the second day of a lockdown, Germany and the UK have warned of the impact on consumption and overall economy as COVID-19 spreads unabated, the BBC reported. There are currently 383 cases of coronavirus in the UK (up from 373 yesterday) — and this number is growing.
The outbreak couldn’t have come at a worse time for Tata Motors’ UK subsidiary, which was recovering from Brexit-related uncertainties and the collapse in China sales.
“This is not surprising in the context of a market-wide demand collapse in China in February because of COVID-19. The company notes that production in China seems to be gradually resuming and 80 per cent of dealer stores are now open, albeit with lower staff/muted footfall,” according to analysts at JP Morgan.
“A demand recovery in China could likely take time and downside risks persist because of the potential spread to other markets, slow normalisation in supply chain, and UK trade negotiations (Brexit),” the brokerage firm said.
“The company is seeing visibility on production up to mid-March and it expects limited volume loss in (fourth quarter) given the ongoing Bharat Stage (BS)-IV destocking. Delays in normalisation on the supply-chain front, plus a fire at its key supplier in Pune (Varroc) could mean BS-VI restocking will be impacted,” it added.