Tata Motors extended gains thanks to healthy trading volumes in March

Shares of Tata Motors rose 3 percent to 460 rupees on the Bahrain Stock Exchange on Tuesday, in an otherwise calm market, which rose 6 percent in three trading days after the company reported good trading volumes in March.

The counter saw significant trading volume with around 12 million shares traded on the NSE and BSE exchanges as of 10:33 AM. By comparison, the S&P BSE Sensex was down 0.39 percent at 60,377 points.



Tata Motors’ total domestic sales volume grew 30% year-on-year at 86,718 units in March 2022 compared to 66,462 units in March 2021.

Total domestic commercial vehicle (CV) sales increased 21 percent to 44,425 units in March 2022 compared to March 2021. Total domestic passenger vehicle (PV) sales jumped 43 percent to 42,293 units in March 2022 compared to March 2021. PV ICE (Engine Internal combustion) sales increased 34% to 38,936 units, while sales of PV EVs (electric vehicles) increased 376% to 3,357 units in March 2022 compared to March 2021.

The department said the CV growth was on the back of increased activity in road construction and mining and improved infrastructure spending by the central and state government. Early signs of recovery were seen in the CV commuter segment. However, the administration said it is cautiously optimistic about domestic demand for MHCV and ILCV while keeping a close eye on geopolitical developments, fuel inflation and semiconductor shortages.

Meanwhile, easing semiconductor supplies boosted PV retail sales. CVs continue to grow with increased economic activity and high capacity utilization. The brokerage firm Motilal Oswal Financial Services expects continued momentum in the resume cycle. “We prefer companies with higher visibility in terms of recovery in demand, strong competitive position, margin drivers and balance sheet strength,” the brokerage said.

“With the government moving towards infrastructure, reviving the cycle of private capital expenditures and the need for personal mobility, we expect the PV and CV space, in particular, to see a good recovery in sales volumes, going forward. But in terms of fuel inflation, ICICI Securities said In a report for the automotive sector, the supply of semiconductors will be a major component of the watch.

The brokerage has a “buy” rating on Tata Motors with a target price of Rs 515 per share. The stock got support near the Rs 380-400 levels in multiple instances in the past. Also, given the high volume of delivery activity in October 2021 and then in early March 2022, these levels seem critical. In such a scenario, the stock’s positive bias may continue until these levels are maintained, analysts said in their report.

The Z delivery score reading in the cash passage indicates that there is still room for more delivery in the coming days. In time, they said, the upward movement in the stock should spread.

However, Tata Motors has underperformed the market by declining 7 percent in the past three months, compared to 0.19 percent in the S&P C Sensex. Over the past month, it is up 9 percent, versus an 11 percent rise in the benchmark. The stock reached a 52-week high of Rs 537 on November 17, 2021.

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