1:1 Split: Tata's Auto Stock Rs 38 Away From 1-Yr Low, Plans $1.5 Bn Investment In EVs; Appealing To Buy?

Tata Motors, the automobile giant of Tata Group, witnessed buying sentiment on Thursday, January 23, 2024, after falling by nearly 5% in the past three consecutive trading sessions this week. Currently, the stock gained by over 1.5% on BSE. The performance comes after Tata Motors reportedly announced its plan to invest about $1.5 billion in its EV business to gain market share. Tata Motors EV market share has dropped significantly since last year, due to intense competition.

However, despite the latest surge, Tata Motors is still nearly Rs 38 away from its 52-week low of Rs 718. Tata Motors has been resisting around its lows while falling by 36% from its 52-week high of Rs 1,179.05 apiece as of now. Notably, brokerages continue to remain optimistic in Tata Motors stock.

Tata Motors Share Price:

At the time of writing, Tata Motors' stock price is at Rs 753.75 apiece, up by 1.45% on BSE with a market cap of Rs 2,77,464.79 crore. The stock traded near its intraday high of Rs 755.75 apiece. Overall, the stock zoomed by 1.51% in Thursday's trade.

Tata Motors' share price witnessed selling pressure from January 20th to 22nd, falling by nearly 5% from its Rs 779.75 level which was recorded last week on January 17.

The auto giant's price-to-equity ratio stood at 29.60x, while the return on equity was at 30.6% as of January 23.

Tata Motors Investment In EV:

P.B. Balaji, group CFO at Tata Motors, told Reuters that Tata Group's $1.5 billion initial investment to build a battery gigafactory in India and supply Tata Motors will allow it to further integrate its supply chain. Reportedly, the company is mulling to locally manufactured EV batteries would enable maintain its edge in an industry where competition is intensifying with new launches.

In 2024 alone, Tata Motors market dominance in electric vehicle segment dropped to 62% from 73% a year ago. Rivals like JSW MG Motor gained a share in the EV segment with new launches. Tata Motors competitors such as Mahindra & Mahindra, Hyundai Motor and Maruti Suzuki are also upping their games to compete in the EV market. The three giants are expected to launch new EV cars in the country in 2025.

Going ahead, the company is planning the demerger of Tata Motors into two separate listed companies housing A) the Commercial Vehicles business and its related investments in one entity and B) the Passenger Vehicles businesses including PV, EV, JLR, and its related investments in another entity. The demerger ratio is 1:1, which means that shareholders of Tata Motors will have identical shares in both the listed companies. The demerger is expected to be completed by March 2025.

BUY Tata Motors Stock?

EquityPandit in its weekly outlook for the January 20-25th session, said, technically, Tata Motors' share price will see immediate support at 757.20 and immediate resistance would be seen at 793.90. If Tata Motors' share price closes below the immediate support of 757.20, then a sharp breakdown can be seen. Tata Motors' share price will see major support at 734.65 for the week. On the positive side, immediate resistance will be seen at 793.90. Closing above 793.90, Tata Motors' share price will see a sharp breakout. Major resistance for Tata Motors' share price will be seen at 808.05 for the week.

As per Trendlyne data, the consensus recommendation from 30 analysts for Tata Motors Ltd. is BUY. Of the total, 12 analysts have suggested STRONG BUY, and 6 experts have given 'BUY' on Tata Motors. The 1-year average target price is at Rs 949.73 apiece, which currently signalled at over 26% potential upside for the 12-month timeframe.

Disclaimer:

The write-up is just for information purposes, and is not a recommendation to buy, sell or hold. We have not done fundamental or technical analysis and have no opinion on article mentioned. Neither, the author nor Greynium Information Technologies should be held liable for any losses. Please consult a professional advisor.