Tata Motors shares hit eight-month high; time to buy, sell or hold?

Shares of Tata Motors rose to a fresh eight-month high today amid the ongoing earnings season. Sentiment round the stock turned positive after the auto firm’s British arm Jaguar Land Rover (JLR) said it plans to invest 15 billion pounds ($18.65 billion) over the next five years to expand its electric-vehicle offerings. With today’s move, shares of Tata Motors were trading 4.28% away from the 52-week high of Rs 494.95 hit on August 17, 2022. The stock hit a 52-week low of Rs 366.05 on May 12, 2022. It has gained 29.78% from its yearly low.

Tata Motors shares hit a high of Rs 475 in the current session, up 1.27% against the previous close of Rs 468.95 on BSE. Market cap of the firm rose to Rs 1.57 lakh crore. Tata Motors stock has gained 7.57% per cent in a year and risen 22 per cent in 2023.

In terms of technicals, the relative strength index (RSI) of Tata Motors stands at 69.1, signaling it's trading neither in the overbought zone nor in the oversold zone. Tata Motors stock has a one-year beta of 1.3, indicating very high volatility during the period. Tata Motors shares are trading lower than the 5-day, 20-day, 50-day, 100-day and 200-day moving averages.

JLR said its Halewood plant in Merseyside, UK, will become an all-electric manufacturing facility. It would also launch a new all-electric Range Rover SUV in 2025 and order books for that vehicle would open later this year.

The board of directors of the firm is scheduled to meet on May 12, 2023 to consider and approve audited financial results of the company (Standalone and Consolidated) for the quarter and financial year ended March 31, 2023.

Here’s a look at what analysts and brokerages said on the outlook of the Tata Motors stock.

Morgan Stanely is overweight on Tata Motors with a target price of Rs 513. JLR reiterated its bullish margin & FCF guidance, thus reflecting confidence .”This is a clear path for de-leveraging of the balance sheet,” the brokerage said. The spending towards electric spending push could re-rate and lend more credibility to JLR’s EV future. The UK arm of the Tata Motors has also guided for GBP15 bn in capital expenditure over the next five yrs and double-digit EBIT margins by 2026, said Morgan Stanley

Macquarie has assigned a target price of Rs 510 to the Tata Motors stock. The brokerage said, JLR would launch three EVs over the next two years. The management has guided for capex of £2.5 bn for FY24, rising to £3 bn for FY26. It plans to attain double digit EBIT margin by FY26

Abhijeet from Tips2trades said,"Despite positive news regarding further capex plans for JLR, Tata Motors stock looks bearish on the daily charts with strong resistance at Rs 484. A daily close below the support of Rs 465 could lead to targets of Rs 452-424 in the near term."

Laxmikant Shukla, Technical Research Analyst at YES Securities has a target price of Rs 530 with a stop loss at Rs 425.

“Tata Motors has surged above a cluster of its exponential moving averages on the daily chart. The stock recently saw some buying and emerged above the sloping trendline on the daily time frame, adding to the bullish sentiment. Primary indicators align with the trend, suggest a continuation of the movement in a comparable period,” said Shukla.

Anand Rathi Investment Services has a buy call on the auto stock with a target price of Rs 560-600 with a stop loss of Rs 400.

“On a larger degree chart, Tata Motors has confirmed a range breakout from the previous swing high of Rs 460. The stock also managed to breakout from the major falling trend line. Thus, we advise traders to go long in the stock in the range of Rs 470-460 with a stop loss of Rs 400 for the upside target of Rs 560 and Rs 600 in 3-6 months,” the brokerage said.

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