Tata Motors shares trading at eight-year high; what should investors do?

Shares of multibagger Tata Motors Ltd are trading at their eight-year high with the Tata Group stock gaining 50% in the last six months. The bullish trend in the Tata Group stock is likely to continue, say analysts. The stock ended flat at Rs 618.45 on Monday.  Earlier in the day, the stock hit a record high of Rs 634.60 on BSE. The gains in the stock were led by positive sentiment in the market and the firm’s UK arm JLR reporting a 30% rise in wholesale volumes for the first quarter at 93,253 units (excluding the Chery Jaguar Land Rover China JV) compared to the corresponding quarter a year ago.   

Tata Motors stock touched an all-time high of Rs 634.60 rising 2.6% intraday on BSE. During the session, the stock also hit an intraday low of Rs 617.50 on BSE. The auto stock has surged 475% in three years.      

In the last session, Tata Motors stock opened higher at Rs 625. Market cap of the firm rose to Rs 2.05 lakh crore. Total 21.32 lakh shares changed hands amounting to a turnover of Rs 133.50 crore on BSE. Tata Motors stock hit a 52-week low of Rs 375.50 on December 26, 2022.      

In terms of technicals, the relative strength index (RSI) of Tata Motors stood at 74.8, signaling it's trading in the overbought zone. Tata Motors stock has a one-year beta of 1.2, indicating high volatility during the period. Tata Motors shares are trading higher than the 5 day, 20 day, 50 day, 100 day and 200 day moving averages.

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Here’s a look at what analysts said on the outlook of the stock. 

Deven Mehata, Equity Research Analyst, Choice Broking said, "The stock was forming higher high higher low formation on charts. Tata Motors is trading at all-time high levels. Currently, the stock is moving above all important moving averages. The stock has moved higher with strong volumes indicating strength. Any dip in the stock can be a buying opportunity. On a weekly time frame, the stock has given a breakout of an inverted head and shoulder pattern indicating bullishness. With a Medium term outlook, one can buy Tata Motors at the CMP of Rs 618.20 with a stop loss of Rs 590 for a target price of Rs 650."  

Abhijeet from Tips2trades said, "Tata Motors stock price has been bullish but it is also overbought on the Daily charts with next resistance at Rs 656. Investors should book profits at current levels and wait for a dip near the daily support of Rs 545 to buy for better returns. Immediate support will be at Rs 592."  

Vaishali Parekh, Vice President - Technical Research, Prabhudas Lilladher said, "The stock has indicated a fresh strong bullish candle on the daily chart with another higher bottom formation pattern visible and with a breakout confirmed has further upside potential of Rs 650-660 levels with Rs 605 zone as the near term support zone. The RSI has maintained the positive bias with strength indicated and has immense potential for further upside movement."  

Financial Services firm Motilal Oswal has maintained its buy call on the stock with a target of Rs 700. It sees a 13% upside in the stock from the current level.  

“Tata Motors should witness a healthy recovery as supply-side issues ease (for JLR) and commodity headwinds stabilize (for the India business). It will benefit from: a) CV upcycle and stable growth in PVs, b) company-specific volume/margin drivers, and c) a sharp improvement in FCF and leverage in both JLR as well as the India business. The stock trades at 19.3x/16.2x FY24E/FY25E consolidated P/E and 5x/4.2x EV/EBITDA. We reiterate our BUY rating, with a target price of Rs 700 (Jun-25E based SoTP)," said the brokerage.

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