Tata Motors Limited's stock performance and operational challenges have come into focus recently, with the company facing a complex mix of domestic policy changes and international setbacks.

Stock Performance and JLR Recovery

Tata Motors' shares gained 2% to Rs 677.00 after Jaguar Land Rover (JLR) announced a phased restart of operations following a cyberattack that halted production for almost a month. This positive movement comes after the stock had declined over 6% in the previous four sessions due to cyberattack concerns.

Market Expert Insights

Market expert Sandip Sabharwal addressed concerns about Tata Motors following the cyber attack on its JLR operations. He stated that the impact occurred earlier and the company reports stabilizing conditions. Sabharwal noted that Tata Motors has underperformed compared to other auto stocks, but potential GST cuts on vehicles in India and improving JLR prospects through the US-UK trade pact could provide support. He believes the stock is moving into value territory rather than sell-off levels.

JLR Cyberattack and Recovery

JLR, which accounts for 70-75% of Tata Motors' consolidated revenue, has made significant progress in its recovery efforts:

• Successfully restored critical systems, including:
  1. Financial system for vehicle wholesale processing
  2. Global Parts Logistics Centre returning to full operations
• Increased IT processing capacity for invoicing to clear supplier payment backlogs
• Sections of its digital systems are now operational

Despite these efforts, challenges remain:

• Production shutdowns extended until October 1
• Estimated impact includes revenue loss of £300-400 million
• Additional indirect costs of £50-100 million, potentially creating a 1-2% drag on Tata Motors' EBITDA

Market Concerns and Company Response

In response to market speculation, Tata Motors had previously issued a clarification to stock exchanges. Maloy Kumar Gupta, Company Secretary of Tata Motors, stated, "We will disclose all material developments in connection with the aforesaid IT security incidence in JLR."

Additional Challenges and Opportunities

Beyond the cyberattack, JLR faces other pressures:

• US market challenges, including potential Trump tariffs (23% of JLR's 400,000 global units sold in America)
• Analysts project moderate 5% revenue growth due to:
  • Muted JLR volume growth
  • Discontinuation of Jaguar models
  • China market share losses
  • US tariff implications

Regarding H-1B visa debates and potential GCC opportunities, Sabharwal advised caution due to dynamic news flow and uncertainty about next steps, particularly for US-exposed companies.

Defence Stocks Outlook

Sabharwal highlighted strong long-term visibility for defence stocks but warned about stretched valuations. Key points include:

• Bharat Electronics remains the most credible government-owned defence play
• Companies like HAL and shipyard firms benefit from both domestic ship-building demand and defence orders
• These defence companies offer growth visibility for 5-10 years, unlike most other industries
• Investors should wait for market corrections to take positions

Looking Ahead

As JLR continues its recovery process, the focus remains on fully restoring its IT infrastructure and minimizing operational impacts. The company's ability to navigate these challenges, particularly the JLR cyberattack recovery and potential US market pressures, will be crucial in determining its future performance and stock trajectory.

Despite the recent 2% gain, Tata Motors' stock performance remains influenced by JLR's dominance in its revenue mix and the ongoing recovery from the cyberattack. Investors will be closely monitoring the situation as JLR works to fully resume operations and mitigate the financial impact of the incident.

Tata Motors , the Indian automotive giant, is facing significant challenges as its subsidiary Jaguar Land Rover (JLR) grapples with the aftermath of a severe cyberattack. The incident has sent ripples through the market, causing Tata Motors' shares to decline and raising concerns about the financial impact on the company.

Cyberattack Impact and System Restoration

JLR, which contributes approximately 70% to Tata Motors' consolidated revenue, has recently restored its financial system for vehicle wholesales following the cyber incident. A JLR representative stated that the company will provide an update on the cyber incident's effects in an upcoming financial report. This development comes after JLR was forced to halt production, affecting its three main UK factories and facilities in India, Slovakia, and China.

Financial Implications and Supplier Payments

Tata Motors CFO P.B. Balaji confirmed that JLR is working with supply partners to prioritize payments following the cyber-attack. Balaji stated that JLR has cleared over $5 billion of debt in the last three years, positioning the company to secure additional short-term liquidity if needed. The company has assured that outstanding payments to suppliers will be settled in the coming weeks as payment processing capacity increases.

Government Intervention Consideration

The UK government is considering providing financial assistance to suppliers of Jaguar Land Rover. This potential intervention comes in response to the operational shutdowns caused by the cyberattack, which has significantly disrupted the supply chain for the automotive manufacturer.

Tata Group Support and Working Capital Management

The Tata Group is providing close support to JLR during the crisis. Both companies are monitoring working capital positions to meet commitments to retail and supply partners. This collaborative approach underscores the severity of the situation and the need for coordinated efforts to mitigate the impact of the cyberattack.

Cybersecurity Concerns

The cyber-attack has been attributed to a group called Scattered Lapsus$ Hunters, highlighting the growing threat of cybercrime in the automotive industry. This incident emphasizes the critical need for robust cybersecurity measures and comprehensive insurance coverage against such risks.

Market Reaction

The news has had a notable impact on Tata Motors' stock performance:

Implications for Tata Motors

Given JLR's significant contribution to Tata Motors' revenue, the financial strain from this cyberattack could have far-reaching consequences for the parent company. Investors and analysts will be closely monitoring how Tata Motors navigates this challenge and mitigates the potential impacts on its financial health and operational stability.

As the situation continues to unfold, stakeholders will be keen to see how quickly JLR can resume normal operations, what measures Tata Motors will implement to safeguard against similar incidents in the future, and how the potential government assistance might alleviate the pressure on JLR's supply chain.