Tata Motors Stock Price: If you are looking for an auto stock with a better valuation for investment, then you can keep an eye on the Tata group company Tata Motors. Here’s why
Tata Motors Stock Price: If you are looking for an auto stock with a better valuation for investment, then you can keep an eye on the Tata group company Tata Motors. The stock has fallen about 21 per cent from its 1-year high. Brokerages believes that the auto stock is in an uptrend, despite the firm’s UK arm Jaguar Land Rover (JLR) hit by semiconductor shortages. The Indian automaker is hugely dependent on its JLR, which contributes 67 per cent to the revenues of the firm. This year, negative cues emanating from the Russia-Ukraine war and the economic slowdown after Covid-19 lockdowns across the world have affected the stock.
The stock has also been affected by a spike in the cost of commodities and a loss in production due to a shortage of semiconductors.
In today’s session, the stock gained 4.16 per cent intra-day to Rs 443 against the previous close of Rs 425.50. Tata Motors stock has gained after four days of consecutive fall.
The stock is trading higher than 100-day moving averages but lower than 5-day, 20-day, 50-day, and 200-day moving averages. A total of 5.91 lakh shares of the firm changed hands amounting to a turnover of Rs 25.93 crore on BSE. The market cap of the firm stood at Rs 1.45 lakh crore on BSE. Tata Motors stock hit a 52-week high of Rs 536.50 on November 17, 2021, and a 52-week low of Rs 293.05 on September 21, 2021.
Should you Invest?
Brokerage house Motilal Oswal has given investment advice on Tata Motors and has given a target price of Rs 514. If you look at the current price of Rs 426, then you can get 22 per cent return in it. The brokerage says that on the supply side, especially in JLR, there is a good recovery now. Commodity prices are also slowly returning to normal. At the same time, due to the macro recovery at the domestic level, Tata Motors will benefit. The company’s volumes are expected to pick up further, while FCF and leverage are showing improvement. The brokerage says that the stock is currently trading at 16.8x the consolidated P/E of FY24E and 4.2x the EV/EBITDA. From here a level of Rs 520 is visible in the stock.
“Semiconductor shortages still remain the key bottleneck for JLR, which is in turn impacting profitability and cash flows,” Motilal Oswal added.
According to the report of the brokerage, there is no concern about the demand in the premium segment. However, macro concerns are affecting overall demand. The good thing is that the order book is getting stronger and the cancellation rate is very low. Semiconductor shortage has been the biggest issue for JLR, but now this problem is also reducing. There is a plan to increase production in the JLR segment to 110-115k units per quarter.
Prabhudas Lilladher gave a buy call to Tata Motors with a target of Rs 510. It has fixed a stop loss of Rs 435. The market price stood at Rs 453 on September 14 when the recommendation was given.
“The stock after the short correction has bottomed out near Rs 440 levels and has witnessed a decent pullback to improve the bias with currently moving past the confluences of significant moving average like the 200 DMA and 50 EMA at Rs 452 zone indicating a “Golden Cross” to strengthen the trend. With the RSI also showing a trend reversal to signal a buy has made the chart look attractive with ample upside potential move anticipated in the coming days. We suggest to buy and accumulate this stock for an upside target of Rs 510 keeping the stop loss at Rs 435, ” said Prabhudas Lilladher in a report.
