Tata Motors share price jumped over 5 per cent to hit its fresh 52-week high of ₹886.30 in intraday trade on the BSE on Tuesday, January 30. Consequently, the stock briefly outpaced Maruti Suzuki, attaining the status of India’s most valuable automobile company based on market capitalisation (m-cap).
However, Maruti swiftly regained its status as India’s leading automobile company by market capitalisation as the shares of Tata Motors trimmed their earlier gains.
Tata Motors share price cooled off and closed 2.19 per cent higher at ₹859.25 on BSE, extending the gains into the fourth consecutive session. At close, the market capitalisation of Tata Motors stood at nearly ₹2.9 lakh crore.
Maruti Suzuki share price closed with a loss of 0.30 per cent at ₹9,963.30 and its market capitalisation on the BSE stood at nearly ₹3.1 lakh crore on Tuesday.
Tata Motors share price has been on an upward trajectory in the recent past. On a monthly basis, the stock has been in the green since November. The stock jumped over 12 per cent in November, almost 11 per cent in December and is up over 10 per cent in January so far.
Cumulatively, Tata Motors share price is up nearly 37 per cent since November. The stock hit its 52-week low of ₹400.40 on March 28, 2023. At the current market price, the stock has jumped about 115 per cent from its 52-week low.
Tata Motors Q3 expectations
Tata Motors will declare its December quarter earnings on Friday, February 2.
According to Kotak Institutional Equities, Tata Motors’ standalone business revenues may increase by 11 per cent year-on-year (YoY) in Q3FY24, led by 1 per cent YoY improvement in volumes due to strong demand trends in MHCV trucks and passenger segment and 10 per cent YoY increases in ASPs due to richer product mix and price hikes taken over the last one year.
“We expect EBITDA margin to decline by 10 bps QoQ to 10.6 per cent, driven by negative operating leverage in Q3FY24. We also expect the domestic PV business EBITDA to improve to 7.3 per cent (up 90 bps QoQ) in Q3FY24, driven by a richer product mix (higher mix of SUV segment),” Kotak said.
The brokerage firm expects JLR volumes (excluding China JV) to increase by 5 per cent QoQ, led by a strong order book. Revenues (excluding China JV) may increase by 7 per cent QoQ in Q3FY24.
“We expect reported EBITDA margin to increase by 80 bps QoQ to 15.7 per cent, driven by richer product mix and operating leverage benefit. As a result, we expect JLR’s EBIT margin to come in at 8.3 per cent in Q3FY24. On a YoY basis, EBITDA is sharply up mainly on account of lower base as the company was facing supply-chain issues during Q3FY23,” Kotak said.
Nuvama Institutional Equities expects Tata Motors’ consolidated revenue growth YoY to be supported by strong growth in JLR and positive growth in India PV/CV divisions.
“EBITDA margin to expand on better scale/ net pricing and cost reduction efforts. The key thing to watch out for is the demand outlook,” Nuvama said.
Is there more steam left?
Analysts are of the view that while the stock is a decent bet from the long-term perspective, the December quarter earnings will be a major trigger for the stock.
Technical analysts are divided in their views for the short term.
Jigar S. Patel, Senior Manager of Equity Research at Anand Rathi Share and Stock Brokers observed that at the current juncture, the stock looks extremely overbought on a monthly scale. Patel said one needs to be cautious at the current levels because there are multiple Fibonacci ratio clusters present near the ₹900–950 zone, which would act as a stiff resistance.
One should opt for profit booking in the mentioned zone and avoid fresh longs,” said Patel.
According to Shiju Koothupalakkal, a technical research analyst at Prabhudas Lilladher, the stock after a good consolidation three months back, saw a decent rally. It is currently indicating fresh bullish candle patterns on the daily chart, giving a decisive breakout above ₹830 to trigger a fresh upward move in the coming days with the next target of ₹930 – 965.
“The overall trend is strong and with indicators showing strength, one can expect further gains, keeping the stop loss at ₹790,” said Koothupalakkal.