The key trigger for the rally has been a Morgan Stanley report that raised its target price on Tata Motors to Rs 448 from Rs 298 earlier, with an upgrade in ratings. The current market price of the stock is just shy of the price target now.
Tata Motors shares were trading at Rs 430, up over 3 per cent in Mumbai trading on Tuesday. Its DVR shares were up over a per cent at Rs 202.25.
Tata Motors is largely seen more as a global luxury play due to Jaguar Land Rover’s dominance in the company’s topline, but the broker believes the incremental upside surprise will come from its Indian business.
Besides the Morgan Stanley report, there have been other factors that have also contributed to the rally. Traders hope the festive season will result in a lot of auto buying. Moreover, the company is at the vanguard in developing EV cars in the country.
Tata Motors has launched many new models in the recent few years that have grabbed attention, with not just their looks but best in class safety features. Consequently, the company has now a larger pie of the market than during 2015-16. And, if analyst commentary is anything to go by, this will only increase. The stock market is pricing just that.
According to Refinitiv data, Tata Motors has a median price target of Rs 375 in 12 months by 29 analysts. The highest estimate on the stock goes up to Rs 513 while the lowest one is at Rs 160. The consensus rating is still a ‘buy’.
As of June 30, 2021, ace Investor Rakesh Jhunjhunwala holds 37,750,000 equity shares or 1.1 per cent stake in the company, which is worth Rs 1,643.63 crore. He has made Rs 375 crore in the market rally in just four days.
The company is yet to declare the shareholding data for the September quarter.
