Tata Motors’ stock gains 7% in a week. Should you buy, sell or hold?

This revenue mix means Tata Motors is down the pecking order on direct benefits of cheaper GST rates seen by pure domestic players like Maruti Suzuki, Hyundai Motor India, and Mahindra & Mahindra.

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Tata Motors shares have climbed nearly 7 per cent in the past week to close at ₹716.10, extending their recovery from oversold levels and hitting a four-month high. While the stock has turbulence from a fundamental perspective, Tata Motors however, remains at an interesting technical juncture, with analysts divided on its near-term trajectory.“After a steep price correction for over a year, the stock now seems to be in a time-wise corrective phase, consolidating between ₹740 and ₹630. A breakout beyond this range will lead to the next directional move. Until then, a wait-and-watch approach is prudent,” Ruchit Jain, SVP – Technical Research at Motilal Oswal, said, pointing out that Tata Motors has underperformed its auto peers despite the sector’s sharp rally. Ajit Mishra, SVP – Technical Research at Religare Broking, said the stock is attempting to shift its short-term trend. “It’s hovering around the 20-day exponential moving average, with sustained trade above ₹730 likely to trigger upside towards ₹770–800. Support remains near ₹680. Rising volumes suggest renewed buying interest, but confirmation above the 200-DMA is needed for a full trend reversal,” he noted.Anuj Gupta, Head of Technical and Derivatives at Ya Wealth, believes the momentum could sustain, suggesting investors look to accumulate the stock on dips. “Strong support is seen at ₹680 and resistance at ₹750. One can buy on dips with a stop loss at ₹675 for a target of ₹750–760,” he said.While the technical picture hints at a cautious bullish bias, fundamentals remain clouded by near-term headwinds. JLR, Tata Motors’ luxury arm, is grappling with production shutdowns following a cyberattack, which could weigh on revenue and profitability this quarter. The disruption, analysts warn, could drag FY26 EBITDA by 1–2 per cent and delay key EV launches under its ‘Reimagine’ strategy.Additionally, US tariff risks loom large for JLR, which derives nearly 23 per cent of its global sales from the American market. Analysts at Nuvama expect muted revenue growth of 5 per cent CAGR over FY25–28, with JLR volumes likely to grow just 1 per cent amid discontinuation of Jaguar models, weaker demand in China, and higher costs. The brokerage has retained a ‘reduce’ rating with a target price of ₹680. Motilal Oswal too remains cautious with a ‘neutral’ call and a target of ₹686.Following the GST rejig, other auto stocks have risen up to 30%, while Tata Motors has seen a muted performance. But why? The muted performance in Tata Motors shares is closely tied to its unique business mix and limited exposure to the GST-driven domestic growth story.

While the Indian government’s recent GST cuts across sectors, including automobiles, aimed to boost consumer demand by lowering costs, Tata Motors’ domestic passenger vehicles (PVs) contribute only about 10-13 per cent to its consolidated revenue. The lion’s share — around 70 per cent — comes from Jaguar Land Rover (JLR), a luxury brand with most sales outside India that can’t reap the benefits of GST changes.

This revenue mix means Tata Motors is down the pecking order on direct benefits of cheaper GST rates seen by pure domestic players like Maruti Suzuki, Hyundai Motor India, and Mahindra & Mahindra. Those companies have bigger domestic footprints and are better positioned to ride the consumption uptick spurred by the tax cuts, which has led to sharp stock price gains. To put things in perspective, M&M derives over 70 per cent of its sales from domestic passenger vehicles, while Maruti Suzuki generates roughly 80 per cent of its revenue from PV sales in India.

Meanwhile, Tata Motors’ much-anticipated demerger of its passenger and commercial vehicle businesses came into effect from October 1, with separate listings expected by November. While the company sees this as a value-unlocking move, Jefferies remains unconvinced on margin improvement and has an ‘underperform’ rating with a target of ₹575.

With mixed signals from technicals and fundamental challenges clouding the outlook, investors may want to wait for a breakout above ₹740 or a sustained move beyond key averages before taking aggressive positions in Tata Motors, experts suggest.

Tata Motors’ stock is down 24 per cent in 1 year.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)

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