Updated: Nov 19, 2019
It’s loud and clear to all investors, Tata motors shares (if bought now) can nearly double the investment in the next 2–3 years.
A brief about the company:
Tata Motors Limited is an automobile company. The Company’s automotive segment operations include all activities relating to the development, design, manufacture, assembly, and sale of vehicles, including vehicle financing, as well as sale of related parts and accessories. In the automotive segment, the Company manufactures and sells passenger cars, utility vehicles, light commercial vehicles, and medium and heavy commercial vehicles. The Company’s all other operations segment mainly includes information technology (IT) services, and machine tools and factory automation services.
The Company operates in over 160 countries across the world.
10 Biggest reasons to buy TATA Motors Stock right now. 1. Valuation:
The stock is trading at 172 Rs. , its lowest level since Sept 09, 2016 (583 Rs.). , 0.90 times its book value (191 Rs.) and 45% down from its 52 weeks high (315.55 Rs). So, the limited downside risk for this Indian conglomerate as a very strong support level is present at 145–150 levels which were the swing low of Sept 16, 2011.
“Ache din” (Good days) will soon be visible for Tata motors as after logging the biggest quarterly loss for India Inc (Rs 26,961 crore), Tata Motors has reported 1,117 Rs. profit in the quarter ended in March. So, you can simply think of what’s been happening in the management and operations to make the company profitable after three consecutive loss-making quarters ( led by uncertainties around Brexit, slowing sales in China, and technological disruptions).
It’s going to be an extraordinary year for Tata Motors: CEO Guenter Butschek
Although the transition from BS-IV to BS-VI Tata Motors’ biggest challenge but we can’t deny the fact that It has the third-largest sales and service network after Maruti Suzuki and Hyundai. Not just in India, Tata Daewoo is the second-largest heavy commercial vehicle manufacturer in South Korea and was acquired by Tata Motors in 2004. Management is confident about their strategy, let’s hope for the best.
4. Tata Sons faith
Tata Sons has been increasing the stake in Tata motors since Oct 2018. The last transaction was done in the month of Feb 2019 where Tata Sons has bought 11.8 million shares of Tata Motors in tranches.
After the latest round of share purchase, the holding company’s stake in its flagship firm goes up to 34.6% from 34.2% at the end of December quarter. Tata Sons has been gradually stepping up it's holding in the beleaguered company as it battles the odds, the worst since it bought the marquee UK-based brands from Ford Motor in 2008.
5. JLR and BMW announce a collaboration
Today (06 June 2019), JLR and BMW announce collaboration for next-generation electrification technology. The collaboration seeks to advance the development of electrification technology to support the transition to autonomous, connected, electric, shared future. Joint investment in research & development, engineering and procurement will provide the necessary economies of scale to support increased consumer adoption of electric vehicles. This will definitely boost the top and bottom-line.
6. Brokerage Reports:
Even after the bad quarter numbers, some of the big brokerages like Jefferies, Phillip Capital, and Kotak Institutional Equities have maintained a buy rating on Tata Motors.
7. Electric Vehicles: Tata Motors Plans
Tata Motors has unveiled electric versions of the Tata Indica passenger car powered by TM4 electric motors and inverters, as well as the Tata Ace commercial vehicle, both of which run on lithium batteries.
Tata Motors’ UK subsidiary, Tata Motors European Technical Centre, has bought a 50.3% holding in electric vehicle technology firm Miljøbil Grenland/Innovasjon of Norway for US$1.93 million and plans to launch the electric Indica hatchback in Europe next year.
No doubt, Tata Motors will be of the biggest beneficiaries of electric vehicles.
8. Consistent Revenue Growth
Short term: Bearish
16 out of 28 major indicators are showing Tata Motors as Bearish on charts.
Mid to Long Term: Mildly Bullish
Note: This technical analysis is based on the Relative Strength Index (14), Stochastic %K (14, 3, 3), Awesome Oscillator, Momentum (10), MACD Level (12, 26), Stochastic RSI Fast (3, 3, 14, 14) , Williams Percent Range (14), Bull Bear Power, Ultimate Oscillator (7, 14, 28)), Exponential Moving Average (5) Simple Moving Average, Exponential Moving Average, Ichimoku Cloud Base Line (9, 26, 52, 26), Volume Weighted Moving Average (20) , Hull Moving Average (9).
10. Industry outlook: Road ahead
The automobile industry is supported by various factors such as availability of skilled labour at low cost, robust R&D centres and low cost steel production. The industry also provides great opportunities for investment and direct and indirect employment to skilled and unskilled labour.
Indian automotive industry (including component manufacturing) is expected to reach Rs 16.16–18.18 trillion (US$ 251.4–282.8 billion) by 2026. Two-wheelers are expected to grow by 9% in 2018.
So, you can easily add Tata motors in your long term stock portfolio.
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