Understanding the Outlook of Tata Motors Share Price: Challenges and Opportunities
Investors and analysts are often questioning the probability of Tata Motors share price bouncing back to Rs 300 in the next two to three years. This article aims to provide a comprehensive outlook on the current situation and potential future trends, while emphasizing the importance of thorough research before making any investment decisions.
The Current Scenario and Historical Context
In recent years, the automotive industry, specifically Tata Motors, has faced significant challenges. The share price of Tata Motors has seen a considerable decline from a peak of Rs 582 on January 23, 2015, to the current trading price of around Rs 120. This decline can be attributed to several factors, including the implementation of the Goods and Services Tax (GST) and a general slowdown in the industry.
The Impact of GST on the Automotive Industry
The introduction of GST in India has had a substantial impact on the automotive sector. The massive GST rate on automobiles and their parts has led to increased consumer costs, which in turn has impacted sales. According to data, the government has estimated that a 50,000 crore rupees of revenue would be involved in cutting the GST rates, which appears unlikely for the current government under Prime Minister Modi, who is seen to prioritize broad economic reforms rather than immediate relief through tax cuts.
Recent Sales Performance
Despite challenges, Tata Motors has demonstrated resilience in some areas. For instance, in September 2018, Tata Motors reported a 20% increase in sales compared to the same period in the previous year, reaching 64,520 units. This growth was significantly higher than other top car manufacturers in the market, with Maruti and Hyundai seeing negative growth rates of -4.5% and -19%, respectively.
The Introduction of New Products
The introduction of new models such as the Nexon, Tiago, and Tigor has been well-received by consumers. These new generation cars have resonated well with new car buyers, contributing to the company's positive sales performance in some quarters. However, the overall industry environment remains challenging, with August 2019 marking a low point in Tata Motors' sales in the last decade.
The Future Prospects and Investment Recommendations
While the outlook for Tata Motors is currently uncertain, there are reasons to believe that the company has the potential for a turnaround in the coming years. With its strong lineup of products and a well-established brand, Tata Motors is likely to continue improving its market position. However, this turnaround is likely to be a gradual and challenging process.
Predicting Share Price Recovery
Predicting the exact trajectory of Tata Motors' share price in the next two to three years is indeed challenging. However, based on current trends and the potential future performance of the company, it is possible that the share price could reach Rs 300 in the next three years. The current closing market price (CMP) stands at approximately Rs 120. Offering cautious optimism, the recommendation is to consider buying above the current price of Rs 165 as a potentially viable investment opportunity.
Conclusion
Investors should approach the investment in Tata Motors with a well-informed and cautious mindset. Thorough research should always be conducted before making any investment decisions. The challenges faced by the automotive industry, particularly Tata Motors, are significant but not insurmountable. With strategic planning and potential government policies, Tata Motors has the potential to recover and provide a return on investment to its shareholders.