Shares of Tata Motors Ltd rose over a percent in early deals on Monday after foreign brokerage HSBC upgraded its stance to Buy from Hold. It trimmed price target of the auto stock to Rs 840. The brokerage said the stock has undemanding valuations with margin growth triggers. Reduction in discounts and warranty costs in UK arm JLR and recovery in domestic SCV business are triggers for margin expansion. This will lead to the company improving its pricing power and operational efficiency.
The brokerage said JLR achieving its guidance in Q4 is a re-rating trigger helping the stock regain investor confidence.
The brokerage says the stock is attractively priced despite some valuation compression over the past 2-3 quarters. EV/EBITDA for FY26 stands at 1.8x which the brokerage said is at the lower end of its historical trading range. Given the improving fundamentals, the brokerage believes the current valuation looks reasonable, presenting a potential upside for investors.
Tata Motors shares rose 1.64% to Rs 666.15 in early deals on Monday. Market cap of the Tata Group firm stood at Rs 2.44 lakh crore. It has a one-year beta of 1.2, indicating very high volatility during the period.
Tata Motors stock hit a 52-week low of Rs 606.20 on March 3, 2025
The stock has clocked negative returns in period up to a year, falling 32% in six months and losing 30% in 52 weeks.
Tata Motors has already received a rating upgrade from CLSA as the foreign brokerage believes an adverse near-term outlook has given scope to enter the counter at favourable valuations. The foreign broking firm has suggested a 'High-Conviction Outperform' on Tata Motors from just 'Outperform' earlier, with a target price of Rs 930, hinting at 36 per cent potential upside ahead.
Tata Motors clocked a 22 per cent YoY fall in profit at Rs 5,451 crore for the December quarter, led by a slowdown in JLR business and muted demand outlook for key markets like China. Revenue from operations rose 3 per cent YoY to Rs 1.13 lakh crore. For the quarter, JLR's EBIT margins improved 9 per cent YoY, but a bulk of its margin improvement was driven by a reduction in depreciation, analysts noted adding that margins in India CV and PV businesses were boosted by PLI accruals.