SENSEX
NIFTY 50
Hang Seng
Taiwan Weighted
MCX GOLD APR 05
MCX SILVER MAR 05
USD/INR
EUR/INR80.0630

SENSEX
NIFTY 50
NIFTY MIDCAP 100
S&P BSE MIDCAP
Hang Seng
Taiwan Weighted
DAX
Nasdaq
MCX GOLD APR 05
MCX SILVER MAR 05
MCX CRUDEOIL MAR 19
MCX NATURALGAS MAR 26
USD/INR
EUR/INR
GBP/INR
JPY/INR

Stock Market Live: Sensex trades 200 points lower, Nifty below 15,200; metals drag; IT stocks outperform

Asian stocks edge higher, Aussie in demand on recovery signs

Today's stock tips by Sudarshan Sukhani, Mitessh Thakkar

Rupee slumps 27 paise to 72.99 against US dollar in early trade

Tata Motors' retail offtake plays catchup with booking demand which company sees only accelerating ahead

Updated : February 22, 2021 05:39 PM IST

Tata Motors has managed to double its passenger vehicle sales volumes from last year.

Gap of 60-70 basis points between the booking market share and the off-take market share.

A year after Tata Motors first displayed the Tata Gravitas to the world at the Auto Expo 2020, the SUV is now officially launched in the market, named after the iconic Safari. Thanks to its product offensive, the New Forever range, Tata Motors has managed to double its passenger vehicle sales volumes from last year, and with the launch of the Safari, the sixth product in Tata Motors’ passenger vehicle lineup, the automaker says volumes can only grow.

However, the retail offtake continues to lag behind demand, as it is supply and ultimately what the company can retail to the consumer that counts, Tata Motors says. “In the second quarter of FY21 we were doing 18,000 units a month on average, the third quarter was 23,000 units a month, and in the first quarter, January alone saw sales of 27,000 units. So there is still a lag between demand and supply, with demand outpacing supply”, Shailesh Chandra, President of the Passenger Vehicles’ business at Tata Motors told CNBC-TV18.

He added, “there would be a gap of 60-70 basis points between the booking market share we have and the off-take market share. So that shows there is still a gap to be addressed in meeting demand and being at the rightful level of our market position”.

Chandra said that Tata Motors’ channel inventory continues to be at very low levels, which isn’t helpful considering the unfulfilled demand that leads to, but it is a sign of intrinsic demand. Additionally, Tata Motors has possibly the highest number of days in terms of bookings available in the industry, which Chandra also reads as a sign of demand which will not only sustain but also grow.

“While we have more than doubled volumes compared to where we were last year, our profits have swung significantly too. Our EBITDA margin was at positive 3.8 percent in Q3 [for TML], up from about negative 9.4 percent. The significant swing in profitability shows the focus is not only to grow and scale, but scale also helps profitability. We have a mix of products which deliver both volumes and profitability”, Chanda told CNBC-TV18.

Semiconductor shortage to persist for next 4-5 months

The global shortage of semiconductors for the automotive industry has constrained production lines across OEMs. Tata Motors says the issue will persist for the next 4-5 months, but the OEM is trying to manage the supply chain avoiding the loss in supply. Chandra told CNBC-TV18 that the company had to make alternate arrangements to mitigate this risk, including going to tier-two level suppliers directly to buy semi-conductors, and giving advanced schedules to suppliers for 12 months ahead, instead of the usual practice of 6 months.

However, the company has pre-planned production for the Safari and says it hopes it will be able to service the demand for the new vehicle, although there will certainly be a waiting period for buyers after they book the product. The extent of the waiting period can be gauged after two weeks of assessing booking levels, Chandra said.

Price hikes likely in FY22

Although Tata Motors, like every major OEM has taken a price hike across its portfolio in January, another hike in prices cannot be ruled out in the next fiscal years, as commodity prices continue to be inflated.

Chandra cited a 5-7 percent impact on the cost side, which the company will offset by taking price hikes and also by undertaking a sharp cost reduction program. As the automaker anticipates steel prices to remain high in Q4, along with the constrained supply of semi-conductors which will bring a cost impact, Chandra says there will be a residual recovery that the company will still have to do despite January’s round of price revisions.

Since demand is not a very certain path, Chandra says, the timing and the quantum of the price hikes will be decided in a “balanced manner”, given the precarious demand situation.

You May Also Like

China releases high-resolution Mars images from its Tianwen-1 probe

China releases high-resolution Mars images from its Tianwen-1 probe

Don't see any reason why US 10-year yield can't move to 1.50-2%: Deutsche Bank's Goel

Don't see any reason why US 10-year yield can't move to 1.50-2%: Deutsche Bank's Goel

Gold rate today: Yellow metal falls below Rs 45,000 per 10 grams; Silver declines 1%

Gold rate today: Yellow metal falls below Rs 45,000 per 10 grams; Silver declines 1%

Trending on CNBC-TV18

Live TV

recommended for you