Tata Motors to hike PV prices to offset input costs

Auto major Tata Motors Ltd's share surged 1.53% in early trade to ₹431.85 on the NSE. The stock surged despite the company announcing its plans to increase the prices of its passenger vehicles affected today i.e. November 7, 2022.

Tata Motors, which was the third biggest auto company in terms of dispatches to dealers after Maruti Suzuki and Hyundai India, said it'd implement a "marginal price increase" across its passenger vehicles. "Effective November 7, 2022, the weighted average increase will be 0.9%, depending on the variant and model," said Tata Motors, in an exchange filing.

Tata Motors said it's been absorbing a "significant portion" of the increased costs but the steep rise in overall input prices has compelled it to pass on some proportion through this "minimal price hike".

Tata Motor's overall dispatches to dealers in October 2022 surged 33.29% on a year-on-year basis, which stood at 45,217 against 33,925 units in October 2021.

Before this, Tata Motors had increased the prices of its passenger vehicles in July 2022. To offset the residual impact of the rising input costs, the company hiked prices by an average of 0.55% across the range, depending upon the variant and model.

Tata Motors runs a wide range of PV cars and its portfolio includes popular models like Tata Punch, Tata Nexon, Tata Harrier, Tata Safari, and Tata Tiago, among others.

In October, Tata Motors said its retail sales grew 17% to 76,537 units compared to 65,151 units in the year-ago period. However, its commercial vehicle sales declined 2% to 32,912 units against 33,674 units in the same period last year. Its domestic passenger vehicle sales, including electric vehicles, in the domestic market, stood at 45,423 units, thus registering a growth of 33% as against 34,155 units.

The company is going to release its Q2 FY23 quarterly financial results this week. In Q1, Tata Motors’ consolidated net loss was ₹5,007 crore vs ₹4,450.92 crore in the year-ago period. The loss was attributed to the sales of Jaguar Land Rover, which got impacted due to chip shortages and Covid-19 lockdowns in China. The automaker's revenue rose 8% to ₹71,935 crore during the April-June period compared with ₹66,406 crore in the year-ago quarter. Tata Motors’ PV business continued its strong momentum, and its wholesales were at 1,30,351 units, up 101.7% versus Q1 FY22.

The company stock has seen an overall upward momentum in the past couple of months. The Tata Motors stock surged 3.47% in the past week; 4.68% in the past month; and 6.81% in the past six months. However, the brokerage firm JP Morgan, this month, downgraded Tata Motors' rating from ‘overweight’ to ‘neutral’, while slashing its target price of ₹525 to ₹455. The brokerage firm CLSA maintained an “outperform” rating, with a target price of ₹473.