Tata Motors, the leading automobile manufacturer, experienced a significant boost in its stock price, reaching a seven-year high on June 20. The company’s shares soared to Rs 581.90 on the BSE, a level not seen since September 8, 2016. By 1:10 pm, the stock was trading at Rs 580, representing a 2.5 percent increase from the previous closing.
Several factors contribute to the remarkable performance of Tata Motors in the market.
Expanding Manufacturing Capacity
Tata Motors has substantially expanded its manufacturing capacity over the past three years. The recent acquisition of Ford’s Sanand plant has played a crucial role in increasing the company’s capacity to produce up to 1 million units annually. This strategic move has led to potential savings of approximately Rs 5,000 crore, demonstrating the company’s prudent capital deployment.
Widening Sales Outlets and Service Centers
Tata Motors has emerged as the second-largest player in India in terms of sales outlets. The company now boasts 1,410 showrooms across the country, a significant rise from the 862 showrooms it had in FY20. Furthermore, Tata Motors has increased its service centers from 653 to 855 over the past three years, further solidifying its market presence.
Positive Developments at Jaguar Land Rover (JLR)
Tata Motors’ subsidiary, Jaguar Land Rover (JLR), has achieved remarkable progress in improving its operational and financial performance. JLR successfully reduced its break-even production levels by 50 percent during the fiscal year 2023. Additionally, Jaguar’s strategic decision to discontinue vehicle assembly at the Castle Bromwich plant and focus on transitioning to an all-electric platform is expected to optimize utilization levels and enhance profitability.
Optimistic Outlook in the Indian Market
Tata Motors’ strategy, which centers on producing SUVs and attractive vehicle designs, has garnered positive attention in the Indian passenger vehicle (PV) market. The company’s Indian division has benefited from the current demand cycle and witnessed improvements in its PV franchise. These factors, coupled with the gradual resolution of chip supply issues, have contributed to a significant turnaround in JLR’s operational and financial performance.