Tata Motors shares hit 52-week high; can they breach Rs 700 mark?

Shares of Tata Motors hit their 52-week high today in line with the broader market rally. The stock zoomed 4.74% to Rs 499.8 against Rs 477.20 in the previous session. It opened at Rs 478.20 on BSE. The auto stock has gained after two days of consecutive fall. Market cap of the firm stood at Rs 1.65  lakh crore. Total 18.14 lakh shares changed hands amounting to a turnover of Rs 89.40 crore. Tata Motors stock has gained 21.54% per cent in a year and risen 28 per cent in 2023. Tata Motors stock hit a 52-week low of Rs 366.05 on May 12, 2022.   

In terms of technicals, the relative strength index (RSI) of Tata Motors stands at 62.2, signaling it's trading neither in the overbought nor in the oversold zone. Tata Motors stock has a one-year beta of 1.3, indicating very 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 days ahead of the firm’s Q4 and fiscal earnings.  

Vaishali Parekh, Vice President - Technical Research, Prabhudas Lilladher said, “The stock is in a good up move and given a breakout above  Rs 450 with a symmetrical triangle breakout on the daily chart, and is now trading at the 52-week high. After a good rally, there is small resistance near 515 levels. A closing above Rs 515 will take the stock to Rs 550–600 levels, with Rs 450 level acting as strong support for the longer term.” 

Osho Krishan, Sr. Analyst - Technical & Derivative Research, Angel One  said, “Tata Motors has seen a massive spurt in price-volume and surged to test the 500 mark in today’s session. The stock has also breached the previous swing high, adding to a bullish quotient. However, on technical parameters, post the recent rally, the counter has entered an overbought region that indicates the possibility of some cool-off in the near period. The overall structure remains buoyant with a buy-on decline approach. As far as levels are concerned, the immediate support lies around  Rs 480, followed by sacrosanct support of the Rs 465 zone. While on the higher end, sustenance above the Rs 500-510 zone could only trigger the next leg of rally towards the 52-week high zone.”  

Vinit Bolinjkar, Head of Research, Ventura Securities said, “Tata Motors will announce its Q4FY23 results on May 12, 2023 and investors are eagerly anticipating a strong performance with significant revenue growth and profitability. The company has reported better-than-expected sales volume growth in its JLR, CV, and PV segments and thanks to price hikes implemented in Q3FY23, the company is anticipated to report strong revenue growth. Additionally, a decline in input costs is likely to further boost the company's profitability. Moreover, there is great excitement among investors as the company is expected to share the details of its GBP 15 bn capex plan for EVs in the Q4FY23 result conference call. The market has already factored in these positive developments, leading to a significant rally in the stock price. We are expecting a strong recovery in TML’s consolidated financials as supply-side issues are relaxing (for JLR) and commodity headwinds are easing (for PV and CV). It could improve the margin profile of the company and enhance its FCF generation in the coming years. We have a FY26 price target of Rs 715 per share, which represents an upside potential of 43.3% from the CMP.” 

Abhishek Gaoshinde, Deputy Vice President Research at Sharekhan by BNP Paribas said, "Tata Motors is witnessing an improvement in all business verticals – JLR, CVs, and PVs. The company is witnessing robust demand in JLR and is expected to deliver better operational efficiencies, aided by aggressive launches and market positioning. We expect sequential improvement in operating performance in JLR as well as standalone business in Q4FY23E. While JLR’s free cash flow is expected to improve sharply in Q4FY23E, the domestic PV and CV business continue to maintain traction in volumes. Along with an improvement in operating performance a value unlocking in Tata Technologies would help Tata Motors in reducing net automotive debt in medium term. Currently we have Buy rating on the stock with target price of Rs 516."

Deven Mehta, Equity Research Analyst, Choice Broking said, "The stock was forming higher high higher lows on weekly charts since last 7 weeks and trading at 52-week high levels. Currently, the stock is moving above all important moving averages. The stock has given a breakout of a downward slopping trend line which indicates strength in the stock. Any dip in the stock can be a buying opportunity. We can also witness a Bollinger band expansion on higher side after a squeeze which indicates strength. With a medium term outlook one can buy Tata Motors at CMP of Rs 500. It can also be added near Rs 475 for a target price of 540."

Ravi Singhal, CEO at GCL Broking said, "As we can see after interest rates peaked out worldwide, commodity prices have cooled off from highs which is also helping the company to maintain its margins.  The semiconductor issue is almost resolved. Demand for the company's product also continues to grow. These all factors can help the firm to show growth in the coming financial year. Target for the stock  is Rs 640. One should keep a stop loss of Rs 469."

Ravi Singh, Vice President and Head of Research, Share India said, "Investors are quite optimistic on Tata Motors shares amid the rise in demand and recovery that the passenger vehicle side of Tata Motors and the EV side is also seeing a strong growth. Tata Motors is doing good in terms of the domestic EV space with its passenger vehicles having almost 80% market share. On the technical setup, the momentum indicators are indicating positive strength in the counter and the stock may touch the levels of Rs 520 in near term."

Abhijeet from Tipstrade said, "Despite muted April sales numbers, Tata Motors stock price has been bullish but also overbought on the Daily charts with strong resistance at Rs 499. Investors should book profits at current levels or keep a stop loss of support of Rs 478. Next resistance will be at Rs 536."

Meanwhile, the board of directors of Tata Motors is scheduled to meet on May 12, 2023 to consider and approve audited financial results of the company (Standalone and Consolidated), for the quarter and financial year ended March 31, 2023.   

Tata Motors is likely to clock a 37 per cent rise in consolidated revenue led by a strong growth across JLR (+53 per cent), CVs (+18 per cent) and PVs (+7 per cent), said analysts at Emkay Global Financial Services.   

 "The company is likely to see consolidated Earnings before interest, taxes, depreciation, and amortization (EBITDA) margin expand by 140 bps, led by higher production in JLR, and supported by a strong margin performance in CVs," the brokerage firm added.   

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