Shares of Tata Motors Ltd have recovered over 800% from their pandemic lows of 2020. The auto stock, which fell to a low of Rs 63.60 on March 24, 2020 during the Covid-19 blues has clocked a stellar rebound of 814% till date.
The stock hit a 52-week high of Rs 585.95 in the previous session. Later, it closed 0.36% lower at Rs 581.20 on Wednesday.
The auto stock has surged 47% this year. The stock has zoomed 457% in three years.
Tata Motors stock opened higher at Rs 585 on Wednesday against the previous close of Rs 583.30. Market cap of the firm fell to Rs 1.93 lakh crore. Total 7.80 lakh shares changed hands amounting to a turnover of Rs 45.26 crore on BSE. Tata Motors stock hit a 52-week low of Rs 375.50 on December 26, 2022.
In terms of technicals, the relative strength index (RSI) of Tata Motors stood at 73.4, signaling it's trading in the overbought zone. Tata Motors stock has a one-year beta of 1.2, indicating high volatility during the period. Tata Motors shares are trading higher than the 5 day, 20 day, 50 day, 100 day and 200 day moving averages
Vaishali Parekh, Vice-President - Technical Research at Prabhudas Lilladher, said, "The stock has given a fresh pennant breakout above the Rs 580 zone with decent volume participation. It may climb further to hit a near term target of Rs 610 and thereafter Rs 660 levels in the coming days. The support would be strong near Rs 558 zone."
AR Ramachandran from Tips2trades said, "Tata Motors is overbought and looks bullish on the daily charts with next resistance at Rs 589. Investors should be booking profits at current levels and wait for a dip near Rs 508 to buy for better returns in the coming weeks."
Shares of Tata Motors are trading at a seven-year high, breaking out from the long consolidation phase of 18 months on strong growth prospects of the Tata Group firm.
Sharekhan has a buy rating on the stock with a target price of Rs 633. The brokerage expects continued improvement in JLR, PV and CV business along with a reduction in net automotive debt from current levels. The EV business continues to gain traction and the management is expecting it to be EBITDA positive in the near to medium term.
Brokerage firm Prabhudas Lilladher said that India's largest electric vehicle (EV) maker has expanded its manufacturing capacity by nearly three times in the last three years.
The recent buy of Ford's Sanand plant has raised the automobile major's capacity to 1 million units per year. A potential savings of Rs 5,000 crore were achieved through prudent capital deployment in acquiring the plant, analysts at Prabhudas Lilladher said. The brokerage has an accumulate call on the stock with a target of Rs 605.
Brokerage Jefferies has raised the target price on the Tata Group stock to Rs 700 from an earlier Rs 665 in a base case scenario. Jefferies sees a maximum upside of 40% for the stock at a price target of Rs 790 per share.
"The price target of Rs 700 is based on 11X FY25E EV/ EBITDA for India CVs, 10X FY25E EV/EBITDA for India PVs, 2.3X FY25E EV/EBITDA for JLR, and 50% discount to transaction value in stake sale to TPG for India EVs," Jefferies said in a note.
Analysts from Jefferies said Tata Motors' British arm Jaguar Land Rover (JLR) has successfully scaled back its break-even production levels by 50 percent in the fiscal year 2023. As part of its transition to an all-electric platform, Jaguar plans to cease vehicle assembly at the Castle Bromwich plant. This strategic move is expected to enhance the company's utilisation levels, according to analysts.
ICICI Direct has a target of Rs 700 with a buy call for the Tata Motors stock.
According to the brokerage, the company’s future price performance depends on the intent to go auto net debt free by FY25 though healthy CFO generation and sale of non-core assets (including stake sale in Tata Tech). Other factors to watch out for are JLR guiding for free cash flow generation of £2 billion & net debt reduction to less than £1 billion by FY24E.
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