Tata Motors stock tumbles 21% from all-time high, hits 4-month low. Is there more pain ahead?

Tata Motors shares have been experiencing a consistent decline over the past two months, reflecting a troubling downward trend with no apparent signs of recovery. On Friday, 4 October, the stock fell to a four-month low, declining 21% from its all-time high of ₹1,179, which it achieved in July.

In September, the shares plummeted by 12.30%, marking the largest monthly decline in two years. This downward trajectory has continued into October, with the stock already down 4.50% over the last three trading sessions.

The persistent drop in sales volume, combined with a cautious outlook from analysts amid falling demand for passenger vehicles (PVs) has negatively impacted investor sentiment, leading to a substantial correction in the stock price.

This fall has also brought the stock to crucial levels on technical charts. Kapil Shah, Technical Analyst, Emkay Global, and Technical Analysis Trainer at Finlearn Academy, said, "Following a 21% correction from its peak, the stock is currently positioned around the 216-day Exponential Moving Average, a long-term indicator. Over the past 150 days, the range of 920 to 890 has consistently served as a support level."

"The momentum oscillator Relative Strength Index (RSI) is currently situated within the oversold zone. Although the stock is presently near the support level, discernible signs of a bullish resurgence are lacking. A breach below the 890 level may precipitate a further decline to approximately 830. Conversely, surpassing the 960 mark would signal the initial resurgence of the bullish trend," he added.

Weak volumes for September

In September 2024, Tata Motors recorded passenger vehicle sales of 41,063 units, including electric vehicles, reflecting an 8% year-over-year decrease from 44,809 units sold in September 2023.

Its commercial vehicle sales fell by 23% year-over-year in September, reaching 30,032 units, as per the company’s regulatory filing. In the passenger vehicle segment, Tata Motors slipped to fourth place in September, with Mahindra and Mahindra outselling it by 10,000 units, achieving a total sales of 51,062 units.

The passenger vehicle industry is grappling with low demand, leading to an inventory build-up at dealerships and prompting original equipment manufacturers (OEMs) to reduce production. The company's luxury division, Jaguar Land Rover, is also experiencing weak demand, particularly in key markets such as the EU and China, which are currently under pressure.

In its September report, global brokerage firm UBS noted that the order book for Jaguar Land Rover has reached pre-COVID levels.

The company's electric vehicle (EV) segment, in which it remains the market leader, faced challenges last month due to the expiration of registration and road tax waivers in key states. Additionally, fleet EV sales have continued to suffer from the cessation of the FAME II scheme and the exclusion of the fleet segment from the PM-eDRIVE initiative.

In Q2 FY25, Tata Motors reported wholesale sales of 130,753 units, reflecting a 6% decline compared to Q2 FY24. 

During the second quarter of the financial year, the company launched Curvv, which it said has received an excellent response, with strong bookings for all its powertrain options—petrol, diesel, and electric. Initial deliveries of Curvv have already begun, and management has indicated plans to increase production in Q3.

Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before taking any investment decisions.