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Tata Motors hits fresh 52-week high; Morgan Stanley maintains 'overweight' on stock

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Shares of Tata Motors jumped over 8 percent on Monday, hitting a new 52-week high at Rs 415.3 after foreign brokerage Morgan Stanley maintained its ‘overweight’ stance on the stock with a target price of Rs 448.

Tata Motors hits fresh 52-week high; Morgan Stanley maintains 'overweight' on stock
Shares of Tata Motors jumped over 8 percent on Monday, hitting a new 52-week high at Rs 420.75, after foreign brokerage Morgan Stanley maintained its ‘overweight’ stance on the stock with a target price of Rs 448.
At 10:21 am, shares of the automakers were trading 8.3 percent higher at Rs 414.60. The scrip has gained 125 percent Year-To-Date, outperforming the Nifty50’s 29 percent rise during the same period.
Tata Motors was among the top stocks that contributed the most to the Nifty 50's gains today.
Meanwhile, retail sales of Tata Motors’ wholly-owned subsidiary, Jaguar Land Rover (JLR), continued to be constrained by the impact of the global semiconductor shortage on production.
“Retail sales for the second quarter ending 30 September 2021 were 92,710 vehicles, 18.4% lower than the 113,569 vehicles sold in Q2 last year,” the company said in a filing.
“In line with July guidance, Q2 FY22 wholesales totalled 64,032 units (excluding the China JV), down 12.8% year-on-year,” Tata Motors added.
However, the auto major highlighted that the underlying demand for JLR products remains strong with order books at record levels.
“Despite the impact of the semiconductor shortage on production and sales, the company continues to see strong demand for its products with global retail orders at record levels in excess of 125,000 vehicles,” the automaker said.
Further, despite the continuing semiconductor supply constraints, JLR expects to report a free cash outflow of under £0.7 billion for the September quarter, significantly better than the £1 billion outflows initially anticipated, which is another reason for the gains in the stock today.
Cost control and efficiency improvement-led free cash flow generation targets for ongoing deleveraging push, pointed out ICICIdirect.
With volumes in India business picking up pace and due to the optimism over electric vehicle prospects, the brokerage firm has retained its ‘buy’ recommendation on the auto major’s stock.
Today's stellar upmove comes after the 6 percent gains on Friday on the back of reports that private equity firm TPG may invest $1 billion or more in the electric vehicles (EV) division of Tata Motors. Besides, a report said Tata Motors is in early talks with Ford to buy the latter’s units in Tamil Nadu and Gujarat, had also boosted gains in the shares.
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