Tata Motors shares trading at key support level; time to buy, sell or hold?

Shares of Tata Motors were trading at the key support level of Rs 412 today. In the last one month, Tata Motors stock has traded in a narrow range of Rs 418 to Rs 375, largely in a bearish zone below the key support of Rs 412. In terms of technicals, the relative strength index (RSI) of Tata Motors stands at 59.4, signaling it’s neither oversold nor undersold. Tata Motors shares are trading higher than the 5-day and 20-day moving averages but lower than 50-day, 100-day and 200-day moving averages. Tata Motors stock has a one-year beta of 1.5. 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 14.53, which is lower compared to the industry PE of 21.58. This signals that the stock is undervalued compared to its peers. The stock, one of the widely tracked scrips in the auto sector, hit an intraday low of Rs 410 against the previous close of Rs 418.05 on BSE. It has fallen after three sessions of gains.

Market cap of the firm stood at Rs 1.36 lakh crore.

The stock has lost 22.39% from its 52-week high of Rs 528.35 hit on January 18, 2022. It hit a 52 week low of Rs 366.05 on May 12, 2022.

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.

Laxmikant Shukla, Technical Research Analyst at YES Securities has given a buy call to the Tata Motors stock with a target price of Rs 430-450. He advises maintaining a stop loss of Rs 380.

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“Tata Motors stock has recently started gaining traction and breached its lower band of consolidation rectangular channel, portraying a bullish breakout. The surge has been backed by decent volumes supporting the optimistic view in the scrip. In coming sessions, it can face stiff resistance near its 200-DMA, which also coincides with a falling trendline on the daily chart that is placed around Rs 427-430 zone. A decisive breakthrough above the same could only set a new rally. Therefore, traders should wait for the dip towards Rs 405-400 levels for initiating long position in it with the stop loss of Rs 380. They can wait for the target of Rs 430 and Rs 450 levels,” said Shukla.

AR Ramachandran from Tips2trades said, “Rs 423 will be strong resistance for Tata Motors on the daily charts. A close above this level could lead to targets of Rs 443-472 in the near term. Support will be at Rs 408.”

Motilal Oswal has given a ‘Buy’ rating with a target of Rs 520 after the firm announced its global sales on January 10. Motilal Oswal Securities said all three businesses of Tata Motors are in the recovery mode. While the India commercial vehicle (CV) business will see a cyclical recovery, the India passenger vehicle (PV) business is in a structural recovery mode, it said.

“JLR is also witnessing a cyclical recovery, supported by a favorable product mix. However, supply-side issues will defer the recovery process. While there will be no near-term catalysts from the JLR business, the India business (50 per cent of SoTP) will see a continued recovery. The stock trades at 17.1 times FY24E consolidated EPS and 3 times P/BV. We maintain our ‘Buy’ rating with a target of Rs 520,” Motilal Oswal said.

Also Read: Tata Motors shares extend gains, defying weakness in most auto stocks, up 10% in 3 days

The automaker said its global wholesales in December quarter, including that of Jaguar Land Rover, stood at 3,22,556 units, up 13 per cent on a year-on-year basis. Free cash flow is expected to be positive at 400 million British pound for December quarter.

The Tata group firm said global wholesales of Tata Motors’ commercial vehicles and Tata Daewoo range in December quarter stood at  97,956 units, down 5 per cent on YoY basis. It said global wholesales of passenger vehicles came in at 2,24,600 units, up 23 per cent YoY.

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