Tata Motors share price hits 52-week high; should you buy?
Tata Motors share price rose almost three per cent to its fresh 52-week high of ₹634.60 in intraday trade on BSE on Monday, July 10, looking set to extend its winning run into the third consecutive session.
The stock rose after the company said sales of Jaguar Land Rover (JLR) increased significantly on a year-on-year (YoY) basis for the first quarter of FY24.
In a BSE filing on Friday, July 7, the company said “wholesale volumes for the first quarter for JLR were 93,253 units (excluding the Chery Jaguar Land Rover China JV), up 30 per cent compared to the same quarter a year ago. Wholesales were slightly lower (down 1 per cent) compared to the prior quarter ending March 31, 2023, reflecting shipping schedules, while production was up quarter on quarter.”
“Retail sales for the first quarter were 1,01,994 units (including the Chery Jaguar Land Rover China JV), up 29 per cent compared to the same quarter a year ago. Retails were broadly flat (down 1 per cent) compared to the prior quarter ending March 31, 2023,” Tata Motors said.
Read more: Tata Motors’ JLR free cash flow seen at £400 million in Q1FY24
Shares of Tata Motors have significantly outperformed the BSE Auto index and the equity benchmark Sensex. Tata Motors shares have risen 43 per cent in the last one year against a 27 per cent rise in the BSE Auto index and a 20 per cent rise in the benchmark Sensex.
Should you buy it?
Technical analysts are positive about the stock for the short to medium term.
Jigar S. Patel, Senior Manager of Equity Research at Anand Rathi Share and Stock Brokers said Tata Motors is in a well-established uptrend as it is trading above all major exponential moving averages. “Going forward, ₹600 would act as solid support and ₹650 would act as a major hurdle. If it closes below ₹585, then we may see major long unwinding,” said Patel.
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Sumeet Bagadia, Executive Director at Choice Broking underscored that the stock has been forming higher high higher low formation on charts.
Tata Motors is trading at an all-time high level. Currently, the stock is moving above all important moving averages. It has moved higher with strong volumes indicating strength. Any dip in the stock can be a buying opportunity. On a weekly timeframe, 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 stock at the current market price with a stop loss of ₹590 for a target price of ₹650,” said Bagadia.
The company will report its April-June quarter results for the current financial year (Q1FY24) on July 25, 2023.
Kotak Institutional Equities expects the company’s standalone business revenues to increase by 2 per cent YoY in Q1FY24 led by a 15 per cent QoQ decline in volumes due to weak demand trends in the LCV segment and a 20 per cent YoY increases in ASPs due to (1) a richer product mix, (2) price hikes taken over the past one year and (3) lower discounts as a percentage of ASPs.
“Overall, we expect the EBITDA margin to decline to 7.6 per cent in Q1FY24 from 10.3 per cent in Q4FY24 led by (1) negative operating leverage and (2) cost pressure on account of BS-VI Phase II norms,” said Kotak.
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Disclaimer: The views and recommendations given in this article are those of individual analysts and brokerage firms. These do not represent the views of Mint. We advise investors to check with certified experts before taking any investment decisions.
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Updated: 10 Jul 2023, 01:02 PM IST
