Tata Motors shares jumped 22% in 2023 so far; can they move beyond prior highs to scale Rs 500?

Shares of Tata Motors Ltd have surged 21.64 per cent on a year-to-date (YTD) basis, outperforming a merely 0.31 per cent rise in the domestic benchmark BSE Sensex. The stock on Tuesday settled 1.01 per cent down at Rs 480.25, halting its three-day climb. At today's closing price of Rs 480.25, the stock traded just 2.88 per cent lower from its 52-week high of Rs 494.50.

The carmaker's total wholesales (domestic and international market) declined by 4 per cent to 69,599 units in April, as compared with the same month last year. The company sold 72,468 units in April last year. Tata Motors said its total domestic sales also fell in the same quantum (4 per cent) to 68,514 units last month, as compared with 71,467 units in the year-ago period.

Its board of directors would meet on May 12, 2023, to consider and approve the financial results for the March 2023 quarter and fiscal year that ended March 31, 2023 (FY23).

Tata Motors may register a 37 per cent rise in consolidated revenue, said Emkay Global Financial Services. "The company is likely to see consolidated Earnings before interest, taxes, depreciation, and amortization (EBITDA) margin expand by 140 basis points, led by higher production in Jaguar Land Rover (JLR) and supported by a strong margin performance in CVs," the brokerage stated.

Technical analysts largely remained mixed on the counter. One of them suggested accumulating the stock for a Rs 500-plus target, keeping a stop loss at Rs 450; while the other analyst advised booking profits at current levels. Another one opined that a decisive breakthrough above Rs 490 could only trigger the next round of rally.

Vaishali Parekh, Vice-President - Technical Research at Prabhudas Lilladher, said, "The stock has given a trend line breakout above Rs 450 level and after a strong rally, we can anticipate some consolidation at this level. With Rs 450 as strong support, as of now, one can buy and accumulate this stock for an upside target of Rs 500–520 levels, keeping the stop loss placed at Rs 450.

Osho Krishan, Senior Analyst - Technical & Derivative Research at Angel One, said, "Tata Motors witnessed a continuation in the uptrend post the breakout and surged above the immediate resistance of Rs 480-odd zone. The stock currently hovers near the strong supply zone and has also entered the overbought region on the technical front. As far as levels are concerned, a series of support is placed between the Rs 470-450 zone. And, till it sustains above the bullish gap, the undertone is likely to remain bullish. While on the flip side, a decisive breakthrough above the supply zone of Rs 490-500 could only trigger the next round of rally."   

AR Ramachandran from Tips2trades said, "The stock is overbought and looks slightly bearish on the daily charts with strong resistance at Rs 488. Investors should be booking profits at current levels and wait for a dip near Rs 437 to buy for better returns in the coming weeks."

Meanwhile, Indian equity benchmarks traded higher today, extending their climb for the eighth straight session. The domestic indices traded higher led by strong buying interest in technology, metal, energy and automobile stocks.

Also read: Adani Power shares jump 26% in 8 consecutive sessions; time to buy, sell or hold?