While maintaining its bullish view on homegrown auto major Tata Motors, analysts believe that the Tata group company shares may hit the Rs 700 mark, riding on strong growth drivers. This indicates an upside of over 13 per cent as against the current market price of Rs 618.

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Assigning a 'Buy' rating on the counter, analysts at Motilal Oswal estimate a healthy recovery for Tata Motors as supply-side issues ease for its British arm JLR (Jaguar Land Rover) and commodity headwinds stabilise for the India business.

The Mumbai-headquartered company will likely benefit from the commercial vehicle (CV) upcycle and stable growth in its passenger vehicles segment, company-specific volume and margin drivers, and a sharp improvement in FCF (free cash flows) and leverage in both JLR as well as the India business, Motilal said in a research note.

Here are the factors that can trigger the rally in the auto stock —

- Analysts estimate a double-digit margin by FY26 and expect the auto major to become net cash positive by FY25.

- JLR's FY23 annual report highlights that its strategy for transitioning to a modern luxury vision, centered around electric vehicles, is driven by three platforms, viz. a) Electrified Modular Architecture (EMA) – EV only platform, b) flexible Modular Longitudinal Architecture (MLA) platform, offering flexibility between ICE, hybrid, and pure-electric, and c) JEA for all electric Jaguars, Motilal said.

- The company is actively reinforcing and upskilling its human capital to acquire the skills required for the future and is proactively preparing for the targeted transition. It strengthened its senior management team in FY23 and have added over 800 professionals to get future ready. Also, it is reskilling 29,000 people (including retailer employees) over the next three years in skills vital to electrification, digital, and autonomous cars.

- Additionally, it has entered into strategic partnerships with NVIDIA, Tata Technologies for bringing new technologies to support the transformation and growth of its business.

- Lastly, the company has maintained its sustainability goal of carbon net zero by 2039 by driving transition to all electric future.

The shares of multibagger Tata Motors climbed 6.31 percent in the last five trading sessions and it rallied 60 percent so far this year. The stock is currently hovering at all-time high levels. It hit 52-week high of Rs 634.80 on BSE on Monday.

The auto stock has surged 467 percent in the last three years. Tata Motors shares have been in top form, giving returns of 46 percent in the last obe year, outperforming both Nifty50 and Nifty Auto which have gained 21 percent and 27 percent returns, respectively, during this period.

In terms of technicals, the 14-day relative strength index (RSI) of Tata Motors stood at 74.8, signaling it's trading in the overbought zone. Tata Motors stock has a one-year beta of 1.2, indicating high volatility during the period. The shares are trading higher than the 5 day, 20 day, 50 day, 100 day and 200 day moving averages.