Tata Motors Rebounds After Monday’s 9% Plunge, But Analyst Advises Caution

Tata Motors, which declined as much as nearly 9 per cent on Monday, on May 14 opened in green territory in the morning trade. Soon after the stock dipped into the red territory for a brief period before finally recovering and ending the day with 0.59 per cent gain.

On the BSE, Tata Motors’ shares rose Rs 5.65 or 0.59 per cent to close at Rs 965.2 apiece. On the NSE, the scrip inched up by Rs 4.90 or 0.51 per cent to close at Rs 964.65 apiece.

In the opening trade in the morning, the shares traded higher by Rs 2.85 or 0.3 per cent at about Rs 962 in the opening trade on the BSE. However, the shares soon started falling and entered the red zone to trade down by Rs 3.35 or 0.3 per cent at Rs 957 apiece. Then, it finally recovered and entered into the positive territory at around 11 am.

However, market analyst Manas Jaiswal advises investors to exercise caution despite the rebound. He points out that the stock remains below its crucial 50-day moving average, which suggests a potential downtrend. Additionally, Jaiswal sees no clear signs of a reversal in the technical indicators.

“While a support level exists around Rs 940, a break below this point could send the stock plummeting to Rs 910. It is recommended to wait for the price to climb above Rs 982 before considering a buy,” he added.

Group company Tata Power is also up by Rs 10.50 or 2.5 per cent to trade at Rs 422 on the BSE.

Tata Motors’ shares on Monday declined below Rs 1,000, as its Q4 results missed Street estimates and brokerage retained ‘Reduce’ position.

Its net profit during January-March 2024 soared over threefold in Q4, with its share price rising on Friday. However, it missed Street estimates on revenue and Ebitda fronts.

Tata Motors’ total consolidated revenue from operations during January-March 2024 stood at Rs 1,19,986.31 crore, compared with Rs 1,05,932.35 crore in the year-ago period.

Following the Q4 results, brokerage Emkay Global retained its ‘Reduce’ rating on the Tata Motors stock, with an unchanged target price of Rs 950 per share.

It said Tata Motors’ Q4 earnings were muted, with limited margin expansion across businesses, despite higher volumes. While deleveraging progress continued, it believes the best may be behind for all businesses amid declining orderbook, normalising mix, flattish growth outlook for domestic CV space; and moderating India PV outlook.

Another brokerage Novuma also retained its ‘Reduce’ view. It said, “A muted showing in India CV is likely due to loss of share to railways (DFC), slowdown in infra spend and high base. We are building in a moderate revenue/EBITDA CAGR of 8 per cent/13 per cent over FY24–26E versus 21 per cent/25 per cent over FY21–24. Tata Motors has rallied 15 per cent/ 60 per cent in past three/six months, and 1-year forward EV/EBITDA is 6 times against 5-year mean of 5 times. Retain ‘REDUCE’ with target at Rs 940 (unchanged).”

It added that Tata Motors’ revenue and Ebitda missed estimates slightly due to lower-than-expected numbers in India CV and PV divisions. JLR order book fell from 1,48,000 units in December to 1,33,000 units in March, it said.

The order book exhaustion and a high base should lead to single-digit growth in FY25E, it suggested.

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