In January the shares of Tata Motors have gained more than 16%, due to strong earnings performance in December quarter and strong outlook for UK arm JLR business in the March quarter of the current fiscal. Tata Motors' stock, which closed at Rs 388.1 on December 30 and ended at Rs 452.15 on January 31, has a gain of 16.5% in the auto stock.
The stock was 1.94% higher at Rs 452.15. The stock of Tata Motors hit an intraday high of Rs 454.85 on the day when Sensex and Nifty ended almost flat amid mixed global cues. The stock has lost 12.63 per cent in a year. The firm's market cap was 1.50 lakh crore on the BSE. On December 31, 2022, the share hit a 52 week high of Rs 519.50 and a 52 week low of Rs 366.05 on May 12, 2022. The stock has gained 23.52% of its 52 week low at the current level.
In terms of technicals, the relative strength index RSI of Tata Motors stands at 70.2, signaling it's overbought. Tata Motors shares are trading higher than the 5 day, 20 day, 50 day, 100 day and 200 day moving averages. Tata Motors' stock has a one-year beta of 1.4. The stock has very high volatility and higher risk, this signals that it has very high volatility. A high-beta stock can rise much faster than the index, but can also decline steeply during corrections.
Tata Motors has a price to equity ratio of minus 29.34, which is lower than the industry PE of 54.35. This shows that the stock is undervalued compared to its peers.
In the December quarter, Tata Motors reported a net profit of Rs 2,958 crore for the quarter ended December 31, 2022 against a net loss of 1,516 crore in the year-ago period. Jaguar Land Rover's parent reported its first quarterly profit in two years on rising demand for passenger cars as well as medium and heavy commercial vehicles.
Revenues from operations increased 22.5% to 88,489 crore from Rs 72,230 crore in Q3 FY 22.
Here is a look at what analysts said on the outlook of the stock and what stance should investors adopt toward the Tata Group stock.
Abhijeet from Tips 2 trade said, Excellent Q 3 FY 23 results, which saw its first quarterly profits in almost two years, revived the Tata Motors stock price to an almost four-month high. The stock price is slightly overbought and could face resistance at Rs 456. Investors in buy positions can hold higher targets of Rs 472 -- 494, but with a strict stop loss of Rs 441 support on the daily charts. Key reasons behind the rally in January were 1 Strong performance in Q 3 FY 23, which positively surprised the street 2 Huge pessimism was built up in stock, as Tata Motors saw a steep correction in December, said Sanjeev Hota, Vice President and Head of Fundamental Research at Sharekhan by BNP Paribas. Tata Motors came out with a strong set of performance in Q 3 FY 23 as the three businesses JLR, domestic PV and domestic CV segment both have improved operating performance on sequential basis and the net automotive debt has also come down on qoq basis. JLR business is expected to perform better in Q 4 FY 23 onwards, along with domestic CV and PV business. Management is expecting positive free cash flow in Q 4 FY 23 due to the opening of Chinese market, strong order book of 215 k units and gradual improvement in chip supply. We currently have a Buy rating on the stock with a target price of Rs 516.