Have Tata Motors stock in your portfolio? Take a look at what tech charts indicate

Tata Motors share price: It has been a dream run for Tata Motors stock in the past 12–14 months. The company, which reported a loss for seven straight quarters (from the March 2021 quarter to the September 2022 quarter), has made a noticeable turnaround since then. 

Shares of the auto giant have jumped 104 per cent in the past 12 months, thereby outperforming the benchmark indices by a huge margin. The Nifty Auto index has rallied around 69 per cent during the timeframe, while the 50-share index, Nifty, jumped over 25 per cent in the period under review.

It must be noted here that auto companies faced a tough time in 2021 and 2022, given the chip shortage and the COVID-19 lockdown. Tata Motors took a hit as lockdown measures in China impacted JLR's sales. 

While announcing the March 2023 quarter results last year, the company said that FY23 was a good year for the company, driven by multiple new product launches, an infrastructure push by the government, a strong demand environment, and a positive recovery of the CV passenger set.

This, the auto major added, led the firm to end India's business net debt at the lowest levels in 15 years, along with all-time high revenue, PAT, and EBITDA. This also helped the company declare dividends for the first time since 2016. Jaguar Land Rover (JLR) also delivered a good set of numbers, driven by improvements in chip supply.

The company added that it was hopeful for further improvement in the chip supply and demand environment. "We are watchful that the current growth sustains itself and only goes north in the coming quarters," it said. 

Since then, the company has been making all the right noises on Dalal Street, propelling its share price to touch new levels frequently.

Another significant development by the company was in March this year when the company announced that it would demerge the company into two separate listed companies: A) the commercial vehicle business and its related investments in one entity; and B) the passenger vehicle businesses, including PV, EV, and JLR, and their related investments in another entity.

Most analysts gave it a thumbs-up and said that the demerger news was a much-awaited strategic move and logical progression to further empower each segment and deliver higher growth with greater visibility. 

However, InCred Equities, in their note, said that while the recent quarterly business momentum has been favourable for all divisions, "we feel its CV business has good medium-term potential. But the high competition intensity in the car business, both for India operations and JLR, is a cause for concern."

The company is slated to announce its March 2024 (Q4 FY24) results on May 10. 

Analysts at Prabhudas Lilladher see Tata Motors' revenue growing by 17.3 per cent YoY, driven by healthy volume growth across its segments. Similarly, a higher mix of UV and consistent performance in JLR drive an EBITDA margin expansion of 183 bps YoY. PAT is expected to grow by 9.7 per cent YoY. The brokerage has given an "accumulate" rating on the stock. 

The "accumulate" rating suggests an upside potential of 5 per cent to 15 per cent in the stock, as per the brokerage.

InCred Equities has maintained a "reduce" rating on the stock with a target price of Rs 639.

Tech View 

Shares of Tata Motors are attempting to hold the key support of the 50-daily moving average (DMA) placed at Rs 970, implying a positive bias. If the price action succeeds in closing over the same, a rally towards Rs 1,020 and Rs 1,050 cannot be ruled out, said Avdhut Bagkar, Derivatives & Technical Analyst at StoxBox.  

Furthermore, a decisive move above Rs 1,050 could instil more positivity, propelling the stock to scale fresh peak of Rs 1,100.

The medium-term forecast is poised to scale uncharted territories until the support of Rs 920 is defended. Weekly formation reveals accumulation in the range of Rs 920–Rs 940, signalling a strong range. A breach of the same could see a surge in the selling pressure, and the price could approach the Rs 850 level, Bagkar added.