Rs 65 to Rs 460 in two years: More upside left in this Jhunjhunwala stock?

Shares of Tata Motors have zoomed over 600 per cent in nearly 2.5 years from the low they hit after the Modi government imposed first coronavirus lockdown in March 2020. On April 3, 2020, the stock closed at Rs 65.30. It traded at Rs 460 level on  August 26, translating into returns of 604 percent during the period. Late investor Rakesh Jhunjhunwala held 1.09 per cent or 3.62 crore shares in the firm at the end of June quarter of the current fiscal.

The large cap stock ended 1.25 per cent higher at Rs 468.55 on BSE on Friday. The market cap of the firm rose to Rs 1.54 lakh crore on BSE.Earlier, the large cap stock touched an intraday high of Rs 468.55, rising 2.07 per cent on BSE. Tata Motors shares stand higher than 50 day, 100 day and 200 day moving averages but lower than 5 day and 20 day moving averages.

Total 4.55 lakh shares of Tata Motors changed hands amounting to a turnover of Rs 21.25 crore on BSE.

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The Tata Motors stock hit a 52-week high of Rs 536.50 on November 17, 2021 and a 52-week low of Rs 281.40  on August 26, 2021. Tata Motors share price has fallen 64.61 per cent in a year but lost 2.94 per cent in 2022.

Shareholding Pattern

In Q1 of the current fiscal, 40.08 lakh public shareholders held a 53.60 per cent stake or 178 crore shares in Tata Motors in Q1. Eight promoters held 46.40 per cent stake in the last quarter.

39,46,092 public shareholders held 49.50 crore shares of Tata Motors, amounting to a stake of 14.91 per cent with an individual share capital of up to Rs 2 lakh. 53 public shareholders held 8.50 crore shares of the firm, amounting to a stake of 2.56 per cent with an individual share capital of over Rs 2 lakh.

48 mutual funds owned 22.67 crore shares or 6.83 per cent stake in the firm at the end of June quarter. 582 foreign portfolio investors held 45.52 crore shares or 13.71 percent stake at the end of June quarter.

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Q1 earnings

The home-grown auto major reported widening of consolidated net loss to Rs 4,951 crore in the quarter ended June 2022 against a consolidated net loss of Rs 4,450 crore in the corresponding quarter of last fiscal, Tata Motors said in a regulatory filing. Consolidated revenue from operations in Q1 rose to Rs 71,935 crore in Q1 against Rs 66,406 crore in the year-ago period.

On a standalone basis, Tata Motors logged a net loss of Rs 181 crore, putting up a better show against a net loss of Rs 1,321 crore in the year-ago period. Standalone revenue from operations zoomed to Rs 14,874 crore as against Rs 6,577 crore in the corresponding period a year ago.

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Experts' Take

AR Ramachandran, Co-founder & Trainer, Tips2Trades

"Amid a strong recovery since the pandemic crash in March 2020, majority of the stocks have given excellent returns over this two year period with Tata Motors standing out in the auto sector. Rising demand for EV's & subsequently first mover advantange in the EV segment has led to this amazing rally in Tata Motors.

However, consistent losses coupled with depleting reserves and ever increasing debt with growing recession fears globally can severely dent the stock's future prospects. A daily close above Rs 370 should lead to Rs 425- Rs 445 at best in the coming months. Better levels to re-enter this stock would only be near  Rs 235- Rs 250 from a long term perspective."

Tirthankar Das, Technical & Derivative Analyst, Retail, Ashika Stock Broking

"Prices have resumed uptrend after forming a higher base above the trendline adjoining the lows of June 2022 and July 2022 signaling continuation of the up move and offers fresh entry opportunity.

Recent base formation took place taking support from the 50EMA around the level of Rs 440- Rs 445 further validates of positive price structure. The ADX (currently placed at 20) shows bullish strength, though the negative directional indicator -DMI is still above the +DMI in weekly time frame.

Presence of Harmonic 'White Swan Sea Pony' since July'22 also indicates the same, a 161.8 percent retracement of B-C measures around Rs 525. Hence, considering the overall chart structure it can be expected that stock has bottomed out around the key support zone of Rs 440- Rs 450 and is expected that the stock is likely to maintain a positive bias."

Pranit Arora, Co-founder and CEO, Univest

"During the last two years of the pandemic, automobile companies were not only affected by a drop in sales, but shortages of semiconductor chips was another challenge as the demand stated picking up in the second half of FY22.

Tata Motors has seen a rapid rise in the sales of its domestic PV business since FY20, with the models Harrier, Nexon EV and the Punch. Its total PV sales have grown thrice from pre pandemic levels (Sales of Rs 8,606.6 crore in Q1FY23 vs Rs 2692.6 crore in Q4FY20). Tata Motors has been at the forefront of EVs in India with Nexon EV being highest selling EV in India has for the past three quarters. It also unveiled its ambitious EV "Avinya" prototype which is expected to be market ready in the next two years.

Similarly, Tata Motors has maintained leadership in CVs over the last two years with the sales in latest quarter Q1FY23 much higher than pre pandemic quarter of Q4FY20. (Sales of Rs 12,316.2 crore in Q1FY23 vs Rs 7,015.6 crore in Q4FY20).Though strong on the domestic side, the JLR business is still grappling with several issues such as the semiconductor shortages and lockdowns in China. The management is hopeful that with order book of 2 lakh units for JLR in Q1FY23, and normalised operations in the current quarter, JLR would achieve break even number in FY23. With continuing traction in domestic sales and improving numbers for JLR, the stock is likely to head higher to levels of Rs 550 over the next six months."