Shares of Tata Motors hit a six-year high of Rs 542.20, up 1% on the BSE in Monday’s intraday trade after the Tata group signed a framework agreement with the Gujarat government last Friday (June 2) to build a Lithium-ion cell factory with an investment of about Rs 13,000 crore. The move comes as India looks to develop its own electric vehicle (EV) supply chain.

Tata Motors already operates a Sanand factory and has acquired the adjoining Ford Motor Company factory. According to Reuters, integrating the two plants has already begun and could take up to a year to complete.

Shares of the auto major surpassed the previous high of Rs 537.15 on May 15, 2023. It was quoted at the highest level since February 2017.

Meanwhile, Tata Motors reported its commercial vehicle (CV) sales of 28,989 units in May 2023, up 28.9% month-on-month but down 12% year-on-year. Total May sales fell 1.62% to 74,973 vehicles, compared with 76,210 in May 2022, the company reported Thursday.

Shares of Tata Motors have risen 40% so far in 2023, compared with a 2.5% gain for the S&P BSE Sensex. A strong rise in the company’s share price is seen as all three key divisions of Tata Motors (domestic PV, CV and JLR) will see improvements due to improved semiconductor chip supply.

Moody’s Investors Service recently said it had upgraded Tata Motors’ rating outlook to positive from stable.

Prabhudas Lilladher has a target price of Rs 605 per share on the stock.