Tata Motors rides on a new market high

Tata Motors rides on a new market high

amidst the chip shortage affecting automobile companies, there was a surprise winner on D-Street. tata Motors stock hit a 52-week high on September 11 at ₹420.75 per share. 

the stock rose after foreign brokerage Morgan Stanley continued its ‘overweight’ stance on the stock, with a target price of ₹448.

so, what worked?

the auto company has been posting a steady growth in its numbers. it posted a 26% year-on-year (YoY) growth in domestic sales at 55,988 units in September 2021.

in the passenger vehicle (PV) segment, Tata Motors saw a 21% growth to 25,730 units. the company is also witnessing a gradual recovery across segments now that the Covid-19 impact is decreasing. 

further, it has launched its smallest SUV named the Punch, aimed at buyers of small cars. it is eyeing a monthly volume of 30,000-35,000 units. 

there is growth on the commercial vehicle (CV) front as well. in September, CV sales grew 34% YoY to 33,258 units. 

the electric vehicle (EV) push has also helped. Tata Motors launched its Tigor EV in August. big investors are also coming in. private equity firm TPG is in talks with the auto major to pump in $1 billion of funds in its EV division. 

analysts bullish

Morgan Stanley expects Tata Motors’ India business to post profits by the end of March 2023. 

in Q1, the company’s consolidated net loss contracted to ₹4,450.92 crore, as compared to loss of ₹8,437.99 crore a year ago. 

though the chip shortage is a cause for concern, Tata Motors has assured investors that the underlying demand for its subsidiary Jaguar Land Rover’s products remains strong with “order books at record levels”. it also said that global retail orders are at “record levels in excess of 125,000 vehicles”. 

the steady sales numbers, and assurance of global demand have convinced analysts. with a focus on EV and an expansion on its mind, Tata Motors is now the stock market favourite.