Shares of Tata Motors Ltd. have plunged 35% from their record high over the past five months. The Tata Group stock hit a peak of Rs 1,179.05 on July 30, 2024. After this correction, Tata Motors' shares have neared their 52-week low, now trading 8% above the 52-week low of Rs 718 reached on December 23, 2024. On Friday, Tata Motors Ltd. shares rose for the fourth consecutive session after global brokerage CLSA added Tata Motors to its India focus portfolio, alongside NTPC Ltd, Nestle India Ltd, and Britannia.
CLSA's Outlook on Tata Motors
Following a 35% decline from its peak, CLSA believes Tata Motors is adequately factoring in the risks of a slowdown in commercial vehicles as well as its Jaguar Land Rover (JLR) portfolio.
Market Performance and Indicators
Tata Group shares have surged 101% over the past two years. During the current session, Tata Motors' stock increased by 3.81% to Rs 794.15, up from the previous close of Rs 764.95 on the BSE. The company's market capitalization rose to Rs 2.91 lakh crore.
With an RSI of 48.1, Tata Motors' stock is trading in neither an oversold nor overbought zone. On the BSE, 5.26 lakh shares changed hands, amounting to a turnover of Rs 40.81 crore.
The stock has a one-year beta of 1.1, indicating high volatility during the period. Tata Motors shares are trading above the 5-day, 10-day, 20-day, and 30-day moving averages but below the 50-day, 100-day, 150-day, and 200-day moving averages.
Analysts' Price Targets
Nomura India has set a price target of Rs 990 for Tata Motors' stock.
DAM Capital projects that Jaguar Land Rover's (JLR) volumes will achieve a Compounded Annual Growth Rate (CAGR) of 6.5% over the financial years 2025-2027. The brokerage also expects slightly lower margins and valuation multiples for the commercial vehicle (CV), passenger vehicle (PV), and JLR businesses. In a bear case scenario, DAM Capital has a price target of Rs 675, indicating a potential correction of 9% from Thursday's closing levels.
Sharekhan has set a price target of Rs 1,099 for Tata Motors' stock. "We retain our BUY rating on Tata Motors with a revised price target of Rs 1,099, based on expectations of continued improvement in JLR, PV, and CV businesses as well as reduced net automotive debt. The stock trades at a P/E multiple of 12.2x and an EV/EBITDA multiple of 5.3x its FY2027E estimates," stated Sharekhan.
LKP Securities' Perspective
LKP Securities considers Tata Motors a 'value buy.' The brokerage anticipates a rise in domestic commercial vehicle (CV) demand in H2 and expects recent launches to support growth. LKP 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% from its 52-week highs. Considering our optimistic view on the stock, we now find it attractive at these levels. Hence, it is a value buy. A slowdown in key global markets remains a monitorable," stated LKP.
No comments: