Price of the share has reached $17 on 18.04.2019, the investment idea brought about 17% yield in 15 days
TATA MOTORS (NYSE:TTM)
Take profit: $17
In its annual report, Tata Motors demonstrates an increase in domestic sales in 2018 by 16% compared with last year. The revenue of the entire concern boosted by 9.28% during the year. The company's net income for 2018 increased by more than 20% despite the fact, that the Jaguar Land Rover Group (JLR) acquired in 2008 generated losses for more than 4 billion US dollars in 9 months of 2018.
What happens to the JLR?Sales in 2018 decreased by 4.6% compared with 2017. The main reason is the markets of China (-21.6%) and Europe (-7.8%). The purpose is the "trade war", aggravated in mid-2018. It was in the 2nd half of 2018 that Land Rover sales fell to 13.1 thousand cars against 27.4 in the first half of 2018. At the same time, JLR continues to fight for the Chinese market. After a three-year trial, the Beijing court ruled to suspend the sale of the British bestseller Evoque copy called Landwind X7. As we know, this is the original case in the global automotive industry. We believe that, together with a serious restyling, the Evoque JLR can regain region market share.
The fall in diesel sales in Europe caused by the Volkswagen scandal (FRA: VOW3) certainly hit the Land Rover SUV. But since 2018, most of the cars produced will be moderated hybrids – they will be able to contain a 48-volt battery to reduce emissions. In addition, the newest electric Jaguar I-Pace called the car in 2018 in Europe, confirms the advantages of Tata Motors. I-Pace should be serious competitors for cars Tesla.
The recent S&P credit rating reduction of JLR due to Brexit even will not affect the growth of car sales, moreover, if the group’s external financing becomes more expensive. According to the facts above, the potential growth in JLR auto sales will ultimately have a positive effect on the capitalization of the Tata Motors grou.
AnalysisWeekly trend is in the global downtrend channel (orange) since the beginning of 2015. The channel is clear with pronounced borders. According to the movement structure, an asset very often works out reversal patterns.
Purple lines indicate prices at which historical mirror support and resistance levels pass.
At the moment, a distinct “double bottom” pattern is drawn. It marks a local trend reversal. In the case of the weekly TF – it marks strong fall correction. Working out the entire figure height - and the first goal is the level of $ 17 for a depositary receipt. Further momentum conservation should bring the asset to the target mark of $ 20 for a depositary receipt. This number is confirmed by the center of the entire downstream channel. Reversal patterns from the borders of the channel tend to lead the price to their centers due to impulse. The further movement will be possible only with the preservation of favorable fundamental factors.
All indicators show strong bullish signals. There are triple convergences, both in stochastics and MACD. This feature additionally confirms the fact of price movement to $ 17, and after that - to $ 20.
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