Will Tata Motors Achieve Pre-Corona Stock Price?

Tata Motors’ Stock (NYSE: TTM) has rallied 55% over recent weeks (vs. about a 36% gain in the S&P 500) to its current level around $7 after falling to a low of $4 in late March as a rapid increase in the number of Covid-19 cases outside China resulted in heightened fears of an imminent global economic downturn. But the stock remains 40% below the $11 level reached in mid-February, and we believe it can recover to that level once fears surrounding the coronavirus outbreak are abated.

Our conclusion is based on a detailed comparison of Tata Motors’ performance against the S&P 500 now as well as during the 2008 downturn in our interactive dashboard analysis, 2007-08 vs. 2020 Crisis Comparison: How Did Tata Motors’ Stock Fare Compared With S&P 500?

How Did Tata Motors Stock Fare During The 2008 Downturn And What Does It Mean For The Stock This Time Around?

• We see TTM stock declined from levels of around $18 in October 2007 (the pre-crisis peak) to roughly $3 in March 2009 (as the markets bottomed out) – implying that the stock lost as much as 82% of its value from its approximate pre-crisis peak. This marked a lower drop than the broader S&P, which fell by about 51%.
• However, TTM recovered strongly post the 2008 crisis to about $16 in early 2010 – rising by 385% between March 2009 and January 2010. In comparison, the S&P bounced back by about 48% over the same time period.
• In comparison, this year TTM stock lost 61% of its value between the market peak on February 19 to the low on March 23, and has already recovered 45% since then. Keeping in mind the trajectory over 2009-10, this suggests a potential recovery to around $11 once economic conditions begin to show signs of improving. This marks a full recovery to the $11 level TTM stock was at before the coronavirus outbreak gained global momentum.

But When Can We Expect This Recovery In Tata Motors Stock?

The rally across industries over recent weeks can primarily be attributed to the Fed stimulus which helped to reduce investor concerns about the near-term survival of companies. The gradual lifting of lockdowns globally has also helped the demand for some non-essential goods to recover. Over the coming weeks, we expect continued improvement in demand and subdued growth in the number of new Covid-19 cases in the U.S. to bolster market expectations. While Q1 2021 (ending June 2020) results will be weak, investors will focus their attention on 2022 results – helping Tata Motors stock trend higher over the latter half of the year.

That said, the actual recovery and its timing hinge on the broader containment of the coronavirus spread. Our dashboard forecasting U.S. Covid-19 cases with cross-country comparisons analyzes expected recovery time-frames and possible spread of the virus.

Further, our dashboard -28% Coronavirus crash vs. 4 Historic crashes builds a complete macro picture and complements our analyses of the coronavirus outbreak’s impact on a diverse set of SAP’s multinational peers, including IBM and Salesforce. The complete set of coronavirus impact and timing analyses is available here.

While Tata Motors’ Stock is expected to return to pre-coronavirus levels, which S&P 500 component stocks have the best chance of outperforming the benchmark index? Our 5 In the S&P 500 That’ll Beat The Index: TWTR, ISRG, NFLX, NOW, V look promising.

See all Trefis Price Estimates and Download Trefis Data here

What’s behind Trefis? See How It’s Powering New Collaboration and What-Ifs For CFOs and Finance Teams | Product, R&D, and Marketing Teams