Tata Motors stock trading near 52-week low, oversold on charts; is it a value buy?

Shares of Tata Motors Ltd are trading near their 52-week low touched in December last year. The Tata Group stock, which fell to a 52-week low of Rs 712.05 on December 22, 2023 hit an intraday low of Rs 724.15 in the current session. Tata Group shares have delivered negative returns of -8% this year. On a yearly basis, the stock clocked flat returns of 0.64%.Tata Motors stock is trading in an oversold zone, indicates its RSI of 25.8. A RSI below 30 means the stock is oversold on charts. 

In the current session, the stock was trading in the green, rising over 0.57% to Rs 728.15. Market cap of the firm rose to Rs 2.68 lakh crore in the current session. On BSE, 2.79 lakh shares changed hands amounting to a turnover of Rs 20.34 crore. 

The stock has a one-year beta of 1.1, indicating very high volatility during the period.

The stock is showing weak trend in terms of short term and long term. Tata Motors shares are trading lower than the 5 day, 10 day, 20 day, 30 day, 50 day, 100 day, 150 day and 200 day moving averages.

Tata Motors stock has risen 314% in the last five years. However, the stock looks weak in the short term, falling 25% in three months. 

LKP Securities refers the Tata group stock as a 'value buy'. The domestic commercial vehicle (CV) demand may rise in H2 and said the recent launches are expected to support growth. The brokerage has assigned a fresh price target of Rs 970. 

"The stock is trading at 11.1 times FY27E consolidated earnings estimates. It has corrected by approximately 40 per cent from its 52 week highs. Considering our optimistic view on the stock, we now find it to be attractive from these levels. Hence, it is a value buy. A slowdown in key global markets remains a monitorable," LKP said.

Mandar Bhojane, Equity Research Analyst, Choice Broking said, "Tata Motors is currently trading near its 52-week low of Rs 720, reflecting a notable price correction of approximately 39% from its all-time high. This downward movement has been characterized by a consistent pattern of lower highs and lower lows, signaling a bearish trend. The price action is supported by significant trading volumes, further indicating the potential for continued downside pressure in the near term. Based on these technical indicators, the anticipated downside targets for Tata Motors are Rs 680 and Rs 650, with notable resistance observed around the Rs 800 level. Additionally, Tata Motors is trading below all key Exponential Moving Averages (EMAs), including the 20-day, 50-day, 100-day, and 200-day EMAs, positioning the stock within a bearish market structure. This suggests a lack of upward momentum, reinforcing the likelihood of further downward price action unless a significant reversal occurs. The Relative Strength Index (RSI) currently stands at 24.98, indicating that the stock is in oversold territory. Considering the prevailing market conditions and technical analysis, a prudent strategy for investors would be to monitor buying opportunities during market dips around the Rs 680 and Rs 650 levels. However, investors should exercise caution and avoid attempting to catch a reversal unless there is a clear shift in technical indicators or a strong catalyst driving the price upward."

Ameya Ranadive, Chartered Market Technician, CFTe, Sr Technical Analyst, StoxBox said, "Tata Motors share are currently trading at Rs 728, are down 38% from 52-week high and witnessed a significant correction since August. The stock is at a crucial support zone of Rs 728-715, which has historically attracted buyers. The RSI, at 28, indicates oversold conditions and is displaying a positive divergence, signaling potential for a reversal. However, the short-term trend remains negative, suggesting that any recovery might take time to materialise. Given the favorable risk-reward setup, this presents a good buying opportunity for long-term investors and short-term traders alike. The stock is a strong candidate for a 'buy on dips' strategy, with a recommended stop-loss at Rs 695 to safeguard against further downside. On the upside, targets of Rs 785-815 can be expected as the stock stabilises and builds momentum for recovery."

Mirae Asset Sharekhan has a price target of Rs 1,099 on the stock. 

"Assuming a challenging industry structure in the domestic market, it is encouraging to know that TML has been sustaining its double-digit EBITDA margin in the CV business. While global challenges continue, JLR believes its volume and production would recover sharply in H2FY2025," said Sharekhan. 

"JLR has maintained its guidance of GBP30 bn of revenue, greater than or equal to 8.5% EBIT and net cash positive for FY2025. While hydrogen fuel cell technology is at a nascent stage, Tata Motors has been making efforts to secure its growth prospects in the hydrogen space in future. We have a BUY rating on Tata Motors based on expectations of continued improvement in JLR, PV, and CV businesses as well as reduced net automotive debt," said the brokerage. 

Key risk to the brokerage's assumption is any slowdown or cyclical downturn in any of the locations where the company has a strong presence can affect business and profitability, it added. 

A R Ramachandran, SEBI registered independent analyst says, "Tata Motors stock price is bearish but also very oversold on the Daily charts with strong resistance at Rs 750. Investors should buy only if daily close is above the mentioned resistance for target of Rs 810. Next support will be at Rs 696."

In the September 2024 quarter, Tata Motors reported a 11% fall in net profit. Net profit (attributable to shareholders) came at Rs 3343 crore against Rs 3764 crore profit in the September 2023 quarter. Revenue also fell 3.5% to Rs 1.01 lakh crore in the last quarter against Rs 1.05 lakh crore in the September 2023 quarter. Revenue was largely impacted by lower sales volumes.