Tata Motors' shares down 25% in-a-year: Should you buy?
What's the story
The share price of Tata Motors has been on a downward spiral for the past year, plummeting over 25% to hit a 52-week low of ₹542.55 on April 7.
However, today, the stock opened at ₹733 and hit an intraday high of ₹740, up nearly 1%.
Despite the recent gains, the question remains: is now a good time to invest in Tata Motors?
Market outlook
Analysts have 'outperform' rating on the stock
Analysts remain optimistic about the long-term potential of Tata Motors, especially with the turnaround of its Jaguar Land Rover (JLR) division.
BNP Paribas Securities has an "outperform" rating on the share with a target price of ₹830.
The company believes that while global macroeconomic uncertainty is a key near-term risk, Tata Motors' attractive free cash flow yield relative to other Indian auto original equipment manufacturers (OEMs) is positive.
Strategic plans
Expect JLR's cost structure to improve continuously: BNP Paribas
BNP Paribas also highlighted Tata's plans to grow its passenger vehicle (PV) market share through new launches and reboots, as well as expanding the addressable market for electric vehicles (EVs).
The firm hopes JLR's cost structure to improve continuously and Tata's commercial vehicle (CV) business to start benefiting from an upcycle.
Market trends
Analysts recommend waiting for breakout above ₹745
Technical analysts suggest that the stock of Tata Motors could see further gains, but recommend waiting for a breakout above ₹745 to enter long positions.
Jigar S. Patel from Anand Rathi Share and Stock Brokers, noted an inverse head and shoulders pattern forming with a neckline around ₹745, which often precedes any sharp upward move.
Mandar Bhojane from Choice Broking also witnessed a bullish inverted head and shoulders pattern on the weekly chart backed by significant volume.