Shares of Tata Motors have gained over 16% in January led by strong earnings performance in the December quarter and strong outlook for UK arm JLR business in the March quarter of the current fiscal. Tata Motors stock, which closed at Rs 388.1 on December 30 ended at Rs 452.15 on January 31, translating into a gain of 16.5% in the auto stock.
In the last trading session, the stock ended 1.94% higher at Rs 452.15. Tata Motors stock hit an intraday high of Rs 454.85 on the day when Sensex and Nifty ended almost flat amid mixed global cues. The stock has lost 12.63 per cent in a year. Market cap of the firm stood at Rs 1.50 lakh crore on BSE. The share hit a 52-week high of Rs 519.50 on December 31, 2022 and a 52-week low of Rs 366.05 on May 12, 2022. At the current level, the stock has gained 23.52% its 52-week low.
In terms of technicals, the relative strength index (RSI) of Tata Motors stands at 70.2, signaling it’s overbought. Tata Motors shares are trading higher than the 5-day, 20-day, 50-day, 100-day and 200-day moving averages. Tata Motors stock has a one-year beta of 1.4. This signals the stock has very high volatility and carries higher risk. A high-beta stock can rise much faster than the index, but also decline much more steeply during corrections.
Tata Motors has a price to equity ratio of minus 29.34, which is lower compared to the industry PE of 54.35. This signals that the stock is undervalued compared to its peers.
In the December quarter, Tata Motors reported a consolidated net profit of Rs 2,958 crore for the quarter ended December 31, 2022 as against consolidated net loss of Rs 1,516 crore in the year-ago period. The parent of Jaguar Land Rover reported its first quarterly profit in two years on rising demand for passenger cars as well as medium and heavy commercial vehicles.
Revenue from operations rose 22.5% at Rs 88,489 crore from Rs 72,230 crore in Q3FY22.
Here’s a look at what analysts said on the outlook of the stock and what stance should investors adopt toward the Tata Group stock.
Jigar S Patel, Senior Manager – Technical Research Analyst, Anand Rathi Shares and Stock Brokers said “Since last month, the said counter has been making the higher top and higher bottom, which resulted in a whopping 22% return. One needs to be alert as of now because it has made a dark cloud cover pattern exactly at its historical resistance zone of Rs 455-460 which hints towards some profit-booking in the coming sessions. On the indicator front, Daily MACD is overstretched along with Daily RSI and has made an impulsive structure near Rs 70 levels, which is a matter of concern and could be an early sign of bearishness in Tata Motors. One should book profit immediately. Fresh Buy is not advised as of now.”
Abhijeet from Tips2trade said, “Excellent Q3FY23 results which saw its first quarterly profits in almost two years has revived the Tata Motors stock price to an almost four-month high. The stock price is now slightly overbought and could face resistance at Rs 456. Investors in buy positions can hold for higher targets of Rs 472-494 but with a strict stop loss of Rs 441 support on the daily charts.”
Sanjeev Hota, Vice President and Head of Fundamental Research at Sharekhan by BNP Paribas said, “Key reasons behind the sharp rally in January were (1) Strong performance in Q3FY23, which positively surprised the street (2) Huge pessimism was built up in stock, given Tata Motors witnessed steep correction in December. Tata Motors came out with a strong set of performance in Q3FY23 as all three businesses (JLR, domestic PV and domestic CV segment) have simultaneously logged improvement in operating performance on sequential basis and the net automotive debt has also come down on qoq basis. Along with domestic CV and PV business, JLR business is also expected to perform better in Q4FY23 onwards. The opening up of Chinese market, strong order book of 215k units and gradual improvement in chip supply would augur well for the JLR business as management is expecting positive free cash flow in Q4FY23. Currently, we have a Buy rating on the stock with target price of Rs 516.”
