Tata Motors up 3%, inches towards 52-week high on hopes of biz recovery

The company expects demand for cars and SUVs to remain strong in the forthcoming festive season; however, the supply situation for electronic components may continue to witness challenging time

Shares of Tata Motors were up 3 per cent at Rs 342.50 on the BSE in Monday’s intra-day trade on hopes of recovery in all its three businesses, Jaguar Land Rover (JLR), commercial vehicle (CV) and passenger vehicle (PV). The stock of Tata group automobiles company had hit a 52-week high of Rs 361 on June 15, 2021. It had touched a record high of Rs 606 on February 3, 2015.

In past one month, Tata Motors has outperformed the market by gaining 16 per cent, as compared to 2 per cent rise in the S&P BSE Sensex and 5.5 per cent up in the S&P BSE Auto sector index. However, on a three-month perdio, the stock has declined 1 per cent, as against 13 per cent rally in the benchmark index.

Tata Motors on Friday said its total domestic wholesales increased 28 per cent year-on-year (y-o-y) to 55,988 units in September. The company had dispatched a total of 44,410 units to its dealers in September 2020.

The auto major said its total passenger vehicle sales in the domestic market stood at 25,730 units last month, compared with 21,199 units in the same month last year. Commercial vehicle sales in the domestic market stood at 30,258 units, up 30 per cent from 23,211 units in September 2020, it added.

Post the second COVID-19 wave, markets are witnessing gradual demand recovery across most segments led by M&HCVs (medium and heavy commercial vehicles) with improving fleet utilisation levels, higher number of road construction projects awarded and improving cement consumption, the company said. The growth in SPV has come on the back of demand recovery in the industry post the Covid second wave and a strong response to its “New Forever‟ range of cars and SUVs.

In the electric vehicle (EV) segment, the company for the second month in succession crossed the 1,000 unit milestone to register its highest ever monthly and quarterly sales. EV sales recorded nearly a three-fold growth with the rising acceptance and popularity of the Nexon EV and Tigor EV, it added.

Looking ahead, Tata Motors said the demand for cars and SUVs is expected to remain strong in the forthcoming festive season; however, the supply situation for electronic components may continue to witness challenging time, it added.

Meanwhile, Motilal Oswal Securities maintain ‘buy’ rating on Tata Motors with target price of Rs 400 per share. “Recovery is underway in all the three businesses of Tata Motors. While the India CV business would see cyclical recovery, the India PV business would witness structural recovery,” the brokerage firm said in stock report.

JLR is witnessing cyclical recovery, supported by a favorable product mix. However, supply-side issues would defer the recovery process. While there would be no near-term catalysts from the JLR business, the India business (around 50 per cent of SoTP) would post continued recovery, it added.